Keet & Rountree Dry Goods Co. v. Gideon

BIGGS, J. The plaintiffs are creditors of the W. W. Gideon Mercantile Company, a trading corporation. On September 1, 1897, the latter conveyed its stock in trade, and assets to W. W. Gideon as trustee for the benefit of plaintiffs and other of its creditors.- Out of the proceeds of the administration of said stock sixty-eight per cent of the face value of plaintiffs’ demands were paid. The trustee closed out the remainder of the assigned estate at public auction for $1,025, George W. Logan being the, purchaser as agent of Thomas I. Gideon and E. M. Gideon. , The latter owners sold the property to W. W. Gideon for about $1,800, and he conveyed it [612] to third parties for $2,400, $2,200 of which was secured by mortgage, aud $200 evidenced by the personal note of the vendees. This action is based on the theory that plaintiffs are entitled to hold the Gideons as trustees of the property which they acquired after its sale at public auction, on the ground that one was the trustee for creditors, and the other was his attorney, and it seeks to compel them to account for the profits realized when they sold the property to other persons. The trial court rendered a decree dismissing the bill, from which plaintiffs appealed. This record contains no evidence of actual fraud on the part of the trustees in selling the effects in his hands. The deed to him made it his duty, first, to sell the stock of goods by retail, as is done in the regular course of mercantile business, and thereafter to dispose of whatever odds and ends and unpaid accounts might remain after a specified time at public auction upon due notice and advertisement. The record shows that he performed his duties under the chattel deed of trust to him as therein prescribed, and ultimately sold the remainder of the stock at public auction upon due notice and advertisement in the presence of the representatives of, plaintiffs, who were also among the- bidders at such sale, to the highest bidder at such sale, and it does not show any omission of duty on his part as trustee, either in retailing the goods or in disposing of the residue at auction. It further 'appears that the agent of the president of the insolvent corporation and one of his brothers, both of whom were sureties on its obligations, purchased the goods on their own behalf at the auction sale and that these two purchasers subsequently sold the goods to the trustee ~W. W. Gideon, and he conveyed them to other persons. [613] Knowledge. [612] The pith of the argument of the learned counsel for appellant is that the office of W. W. Gideon as trustee avoided the sale to him as that of attorney avoided the sale of T. J\ Gideon. The law governing the dealings of persons acting [613] in a fiduciary capacity is well settled in this state. Such persons are not permitted to speculate, to their own advantage in the trust estate committed to their care. And any transaction between themselves and their beneficiaries are carefully and jealously scrutinized in equity and will be set aside at the instance of the cesinds que trust in all cases where the fiduciary fails to show perfect fairness and good faith on his part. Patterson v. Booth, 103 Mo. 413, and cases cited in State ex rel. Jones v. Jones, 53 Mo. App. loc. cit. 218. In the case at bar the trustee, W. W. Gideon, did not buy at his own sale. And the uncontradicted evidence is that he did not know of the intention of his vendors, T. J. and F. M. Gideon, to purchase at the trust sale until the property had been struck off to their agent as the highest and best bidder. Without such knowledge or any participancy in that purchase, he (W. W. Gideon) was in no wise disabled to buy the property which in the hands of its new owners was entirelyfreed from its trust character. He had the same unrestricted right to deal with them which one man acting for himself has to contract with other persons as to their own property. We think it clear under the undisputed evidence adduced by the defendants that the connection of the trustee as mesne purchaser of the goods after their sale at auction was not such as to make him responsible to these plaintiffs for the difference between what he paid for the property and that which he received from his vendees. Neither are we able to find anything in this record tending to show that T. J. Gideon, one of the joint purchasers of the goods at the auction sale was incapacitated to buy by reason of being attorney for the trustee. In the first place, both he and the trustee dbny that any such relationship existed. He is an attorney and he was president of the corporation and a surety for it. As president he prepared the chattel mortgage and in his own interest assisted in the calculation of dividends [614] and delivered some of the checks of trustee for dividends to the parties entitled; but there is no evidence that , he ever charged or was paid anything for any of these services. His interest and assistance in the matter may be justly regarded as a dictate of prudence arising from his liability for some of the indebtedness of the corporation and consequent desire to make the most out of the trust property and thus diminish his own loss. There is no evidence that he acquired any particular knowledge of the value of the property which was auctioned off, beyond that which was had by the representatives of the creditors and other persons attending the sale. The proof is that the property was inventoried before its sale, and it is not claimed that the amount of the inventory or the character of the goods was concealed from any one. The sale itself was in strict accordance with the chattel deed of trust, and was not in any way had for the personal advantage of the former president of the corporation. Moreover his instructions to his purchasing agent forbade a bid beyond a fixed price. In short there is no evidence of his complicity in any transaction injurious to the interests of the beneficiaries under the deed of trust. On the contrary the undisputed evidence shows that both he and his joint purchaser acted with the utmost good faith, candor and fairness. Such was the conclusion reached by the learned trial judge, and his decree dismissing the bill will be affirmed. All concur.