Sharpley v. Plant

CalhooN, J., delivered the opinion of the court. In sales made by executors, administrators and all other trustees, uberrima fides is the inflexible rule of law. In making the sale the trustee ‘£ cannot bring others into his confidence, by reason whereof a private sale is made to them on the secret understanding that he is to take an interest or benefit. ’ ’ McGowan v. McGowan, 48 Miss., 553. This doctrine is apparently universal, and it is essential, in order to preserve integrity and good faith in the immense mass of business dealings among men, where confidence is reposed. In this view, there can be and is no difference or distinction drawn by the law between actual and constructive fraud. The law condemns the thing regardless of the motive. There can be, in the nature of things, no condonation of it,' no plausible explana — 188 — tion of it, no arguing out of it. The law is, as it ought to be, inflexible and unbending. The good intentions and honest purposes of the executor cannot vary the wholesome rule, which is bottomed on public policy. Certain it is that there was here a distinct, private agreement and understanding that $925 tof the individual debt of the trustee to the purchaser should be counted as cash in the payment of the bid to be made. This agreement was not disclosed at the sale, nor to the chancery court which confirmed it, and it made the sale void. If honest purpose and good intentions may prevail, the field of actual fraud and perjury becomes boundless. The sale of the 578 acres was therefore void, for the reasons given. If at this sale the whole bid of $3,468 had been paid in cash, it seems from this record that it would have paid off the debts of the testator, and left the minors the 596-J acres remaining of the 1,174-J acres undisturbed. But it is of no concern whether this be true or not. The result would be the same. The purchaser in this case cannot, nor can the appellee, his devisee, who was his agent at the purchase,- and familiar with the agreement and private understanding, avail of the two year’s statute of limitations, applicable where “the sale is made in good faith and the purchase money paid, ’ ’ as provided by code 1892, §2760, because here there was not “good faith ’ ’ in the purview of the law, and the purchase money was not paid in the same purview. ■ If $925 of the individual debt of the executor may be deducted from $3,468, cash bid, why may not $3,000 be so deducted? In matters of such general importance the statute cannot be evaded. There must be first good faith, and then the purchase money must be paid — every dollar of it, unless, perhaps, some trivial sum omitted by mistake or miscalculation. The executor’s sale of the 578 acres was also void because there was no bond for the faithful application of the proceeds of the sale of the land. Code 1880, § 2045; code 1892, § 1905, and authorities cited in the foot notes of both. The omission — 189 — to require such a bond is not authorized by the will. This conveys the lands to Sims, with specific directions to him to ‘ ‘ hold and use them for . the benefit of complainants, appropriate rentals to their maintenance and education, and partition to each, as she arrived at twenty-one years of age or married, ’ ’ the land, in kind, and divide any accumulated rentals. While the will does provide that no bond be required of Sims as executor or trustee, it is clear that the testator never had any idea that he should ever sell the lands. In fact, it shows that the fixed purpose of Mr. Sharpley was that he should never sell them, and the special bond was, therefore, an indispensible prerequisite to a valid sale. The decree below, as to this land sold by the executor, seems to vest the title in Mr. Plant, the devisee of the purchaser, if he will pay the $925 and six per centum annual interest to the minors; otherwise, it orders a sale to realize this money as a lien on the land. This was error. The decree should have annulled the sale and declared the legal title to be in the minors, but, inasmuch as those who come into a court of equity must do equity, this legal title should have been made subject to a lien for an amount to be ascertained by an accounting. This account should ascertain: (1) The sum total of $2,543, the amount of the bid actually paid, with interest added at the rate of six per centum per annum from the day of sale; (2) the rental value of the land annually from the day the purchaser took possession, with six per centum per an-num interest from the last of each year, to which should be added the value of any timber sold by Tatum or Plant, with six per centum per annum from date of sale, the sum total of which, less taxes paid by Tatum or Plant, with like interest from their payment, should be credited on the total principal and interest of the $2,543, and, unless complainants paid any balance so found, the land should be decreed to be sold to pay it. Nothing should be allowed appellee for improvements. We proceed now to inquire into the validity of the sale of the remainder of the 1,174J acres of land made by Mr. Paine, — 190 — as substituted trustee appointed by Scruggs, who was the assignee of the Stern Brothers trust deed. At that sale, Scruggs, the owner of the note and trust deed, was the purchaser, at a bid of $622.50. This sale was made on January 27, 1894, and, on December 26, 1894, Scruggs, the purchaser, conveyed it, for $2,100 in cash, to the appellee, Plant, by a quitclaim conveyance; and thus Plant became the apparent sole owner of the entire patrimony of the two infants. The other 578 acres had been sold by the executor, Sims, on December 24, 1890, to Daniel Tatum, Plant’s devisor. The whole 1,174-J acres were conveyed to the trustee in the trust conveyance, together with all the crops and about all the personal property of the grantor, Mr. Sharpley. This trust conveyance specifically provided that, if foreclosed, the crops should be first sold, then the stock, then the McBeth land, then the McMillan land, ‘ ‘ then the balance, as may be necessary, in this order. ” “ The balance ’ ’ was the land here sued for. It further provides that, if Weisel, the trustee, became unable or unwilling to act, Stern Brothers, or their assignee, might appoint another trustee, “ under their hand and seal. ” The substitutionary appointment here was not under seal. Strictissimi is the rule in the execution of powers by a trustee under conveyance to him in trust. A grantor in such an instrument may clog its execution with any and all difficulties and prerequisites to sale which his imagination may conjure up, and they all become vitally essential to a valid sale. ‘ ‘ There must be a strict adherence, not only to the substance of the power, but also to all the formalities required in its execution by the instrument. . . . If it is to be by deed, nothing but a deed will execute the power. . . . So, if the deed is to be sealed. . . . The general rule is strictly adhered to, that powers can be executed only in the mode and at the time and upon the conditions prescribed in the instrument creating the power or trust.” Perry on Trusts, sec. 511 (b). In reference to the appointment of substituted trustees, Mr. Perry says: — 191 — ‘ ‘ Where it is necessary to act under the powers thus given in the instrument of trust, it is of the utmost consequence that there should be an exact compliance with the power and authority as given. ... If there is any irregularity as to the persons by whom the new appointment is made, or as to the manner in which it is made, . . . the new trustee will be incapable of exercising any legal authority over the trust property, and will be a trustee only de son tort if he interfere, and any purchaser of the trust property may find his title utterly worthless.” Perry on Trusts, sec. 288; Learned v. Matthews, 40 Miss., 220; Brame & A. Dig., 820. “The conditions attached by the donor to the execution of a power must be complied with strictly, however unessential they may seem. ’ ’ 18 Am. & Eng. Ene. L., 837 and notes. The sale was clearly void for want of a seal to the appointment of a substituted trustee. The case of Mo McCarley v. Braid, 58 Miss., 483, has no adverse relevancy to this. Here the complaint is that the parties did not comply with the solemn contract in making the appointment in the execution of the power. There cannot be, in the nature of things, any equitable estoppel of complainants in the case at bar. Sharpley, the grantor in the trust instrument, would not himself have been estopped. McPherson v. Reese, 58 Miss., 750. Mr. Sharp-ley’s answer to the suggestion of estoppel would be that: “The instrument between us was a contract. We contracted at arm’s length, and I stipulated expressly for seal to any appointment, as I had a perfect right to do, and you accepted the security with that condition, and you now claim under the contract, with a violation of that condition.” Suppose the contract had stipulated that the appointment should be made with the picture or drawing of a horse opposite the name, would any court hold that this might be dispensed with in a sale in pais ? There is no restriction on the power to contract, where no public policy is violated. A grantor in a trus.t deed may hamper sales by any conditions he chooses, however tech — 192 — nical or useless or eccentric they may seem, and may, even, have the purpose, in bis requirements, to make resort to sale in pais so difficult and cumbersome as to make it probable that the beneficiary will proceed in chancery to foreclose. It is no answer to this to say that seals have been made unnecessary by law. ‘£ Consensus faeit legem. ’ ’ The inquiry is idle as to what seal should be affixed, because by law now there is no form of seal. Any device designed to represent a seal would be sufficient. Whittington v. Clarke, 8 Smed. & M., 485; 21 Am. & Eng. Enc. L., 884. The sale being void, for the reasons given, Mr. Plant has no title, and the title is in complainants. We are strongly inclined to think that, by the proper application of payments, the mortgage debt was fully paid before the sale, and so it was void for this. This should be ascertained exactly, by a commissioner appointed for that express purpose. The lands are not chargeable for debts contracted after Mr. Sharpley’s death. The proceeds of the sale of the 578 acres released from the trust by Scruggs must be held to have been appropriated, as the decree of sale required, to the mortgage debt. Mr. Scruggs’ dealings with the executor and the estate are such as to make it certain that he is entitled to no consideration on the score of ignorance or the illegal character of the business transactions of the \executor with him. On the coming in of the itemized report, if there be anything due on the mortgage, it shall be, with ten per centum interest, a lien in favor of Plant on this 596£ acres, and the same proceedings had as in the case of the 578 acres. Whether or not any sum be due on the mortgage, Plant shall have a-lien for taxes paid by him, with six per centum interest per annum; and he shall be required to account for reasonable rents, as in the other case, against which he may offset improvements, but be allowed nothing for them in excess of rents. Reversed and remanded.