Jamison v. Glascock

Scott, Judge, delivered the opinion of the court. This case turns on the propriety of the instructions asked by the plaintiff and refused by the court. If the substantial facts, whose existence is assumed by the first instruction asked by the plaintiff, are proved, (and in the hearing of this writ of error we .must take them to be true,) we do not see how the conduct of the defendant can be reconciled to those principles which have been established by courts of equity for the government of the conduct of trustees. The office of a trustee is one of confidence, and he is watched with the greatest vigilance lest he should abuse the confidence reposed in him. - As he voluntarily assumes the trust, the law will not permit him, in the management of it, to make to himself any profit or ’advantage at the expense of the cestui que trust. He can not become the purchaser of the trust property but at the option of those for whom he acts, as he thereby unites in himself the opposing characters of the seller and purchaser — the interest of the former of which is to sell for the highest price that can be obtained, while that of the latter is to buy. for the least sum at which the property can be acquired. In such cases equity does not examine for fraud on the part of the trustee who attempts to purchase the subject of the trust, but takes away the temptation, by holding him incapable of making a purchase which shall bind those for whom he is entrusted ; and it gives them the option to vacate or affirm the purchase of their trustee. The rule prevents a conflict between the interests and the duty of the trustee, and shuts out a difficult and embarrassing inquiry into his motives. It is necessary for the security of those whose property is held in trust, and promotes integrity in the dealing of the trustee with the [196] property that has been entrusted to his care and management. The defendant having a confession of judgment against the plaintiff, by law he would have a right to enforce the judgment by execution, and to become a purchaser at the sale under it. But there was nothing to prevent the defendant from divesting himself of this right, if he thought proper to do so. Having it in his power to collect his judgment at any time, as both he and the plaintiff knew, what could have been his motive in acting under a power of attorney which authorized him to sell the very lots which were afterwards sold under the judgment ? The power of attoi'-ney was executed after the confession of the judgment. What hopes must have been excited in the plaintiff by the defendant accepting the power of attorney authorizing him to sell the land ? It must have lulled his apprehensions respecting the sacrifice of his property under the judgment which had been confessed. How naturally would the thought occur to the plaintiff that the defendant would not use his judgment, as he had a power of attorney to sell. Could the plaintiff have supposed that, after this, the judgment would have been enforced, until he at least had notice of a failure to raise money under the power of attorney ? It may be said that the defendant had a right to issue the execution and to become a purchaser under it. But would not the acceptance of the power of attorney be an abandonment of this right ? After consenting to sell the lots under a power of attorney, and thus placing himself in a fiduciary relation to them which prevented his becoming a purchaser, he could not use his judgment in such a way as to relieve himself from the incapacity to which he had voluntarily subjected himself. As his rights as a creditor were in conflict with his duties as an agent, the former must yield to the latter. By taking upon himself the office of agent, he waived his right as a creditor so far that he could not become a purchaser. The case of Rogers v. Rogers, in Hopkins’ Ch. R. 515, is very similar to that before us. There, a person by his will [197] appointed an executor. Between tbe time of making the will and the death of the testator, the person named as executor became a judgment creditor of the testator, and after his. death qualified as executor. The testator left debts unpaid and an estate consisting of personal and real property. The personal estate was insufficient to pay the. debts. The executor caused all the lands of the testator to be sold under an •execution issued upon the judgment held by himself as a creditor, and he became a purchaser. The sale and purchase were vacated at the instance of other persons interested in the estate of the testator. The chancellor remarked : “ If the executor had not accepted the trust, he would have been at full liberty to pursue all his remedies for the satisfaction of his judgment; and if loss to' others had followed the exercise of his rights as a creditor, he would not have been responsible. When he accepted a trust which imposefi on him the duty of taking every legal-and prudent measure to pay the debts of his testator from the personal and real estate, he was no jonger at liberty to exert his rights as a creditor in opposition to his duties -as executor. He continued a creditor, but he relinquished any right of a creditor which might interfere with his duty as a trustee. Having accepted the trust, he could not, in the character of creditor, do any act which should subvert or impair the interests of those for whom he was trustee.” The circumstance that the trustee was an executor constitutes no real difference between the case cited and that now under consideration. The executor, knowing that he was a judgment creditor, voluntarily took upon himself the office of executor. There was no legal compulsion on him to accept the duty of executing the -testator’s will. Thus willingly making himself a trustee, the executor was held to have relinquished his right to become a purchaser at a sale of the property with which he was. entrusted. So here, although the judgment creditor might have enforced his judgment and have become a purchaser at a sale under it, yet, voluntarily clothing himself with a trust in relation to the [198] property which disqualified him from acquiring it at a sale, he must be regarded as having renounced that right. The rule of equity applicable to this subject extends not only to trustees strictly so called, but also to persons standing in a similar situation, — such as executors dealing with the estate of their testator; or committees with the estate of the lunatic ; or commissioners, assignees, or solicitors of a bankrupt or insolvent estate purchasing any portion of the assets ; or the agent of the trustee who becomes the purchaser of the trust property; or a governor of a charity taking a lease of the lands of a charity; or an agent for buying or selling property buying or selling for or to himself. In none of these instances will the transactions be suffered to prevail against the equitable rights of the injured parties. (Hill on Trustees, 223.) We deem that most of the grounds taken by the defendant in support of the judgment have been answered in what has been already said. We do not see what the statute of frauds has to do with this controversy. If the case is as stated in the first refused instruction, then, if it is within the statute of frauds, so are all the cases in which the trustee becomes a purchaser of the trust fund; for this suit can be maintained on no other ground than that a trustee charged with a trust in relation to property has become the purchaser of that property. Why does the defendant attempt here to explain the object of the power of attorney, after having so emphatically denied that he ever accepted any agency under it ? He asserts here that the bulk of the plaintiff’s property was in Kalis county. This may be probable, as he took a confession of judgment there, the lien of which we may suppose he thought would be a sufficient security for his debt; but this fact is not in the record. We may not know how the facts are in relation to this matter, but we know the lien was only such in the county in which the judgment was confessed. Assuming that the bulk of the property was in Ralls, the plaintiff asks why this suit was not brought for the lands in Ralls county. [199] This inquiry implies that lands, were sold in that county to pay the defendant’s debts. But if the bulk of the property was there, why would he go to. Marion county, where his judgment was no lien, and seize' 'property to satisfy his debt, unless he would tell us that all the property in Ralls had been exhausted. If he would" turn away from property in that county subject to his execution, and go into Marion in search of town lots, it would certainly be a circumstance against him. We do not know how this matter is, but we think it very singular that it was not fully explained in the court below. We are of opinion that there was no error in refusing the second instruction, as there was no evidence to warrant it. Reversed and remanded; the other judges concur.