McCulloch v. Chatfield

THAYER, Circuit Judge, after stating the case as above, delivered the opinion of the court. It is obvious from an inspection of the record that, in so far as there is any substantial controversy developed by the pleadings or the testimony, the plaintiff, McCulloch, on the one side, and the defendant H. li Allen, on the other, are the only interested parties. It is conceded by all that by contributing $£i5,000 towards the objects of the speculation in which H. E. Allen, W. II. Ohatfield, William Woods, and T. E. Handy became Interested by the agreement of February 3, 1882, the plaintiff, McCulloch, became, and now is, entitled to one twentieth of the proceeds oi the sale of the land in controversy, after the large sum now due to the trustee for advances and other expenses of the trust have first been paid. Whether, in addition to that interest, he is further entitled, under the agreement with Allen, to another one-fortieth, making his total interest in the proceeds three fortieths, is a question that in no wise concerns the trustee, or the other defendants besides Allen. The one-fortieth interest thus in controversy belongs either to the plaintiff or to the defendant Allen, as all of the parties agree. With the exception of this one issue, which, according to the answer filed by Allen, seems to turn largely on the question whether the alleged agreement to give him such additional interest was obtained by fraud, there is no other issue in the case, so far as we are able to discern. The question arises, therefore, on this state of facts, whether the record discloses any adequate ground for equitable relief. It is clear, we think, that the plaintiff has no estate in the land, as distinguished from the proceeds of sale, which entitles him to a decree of partition, or to a decree adjudging that he has a three-fortieths, or any other, undivided interest therein. The agreement of February 3, 1882, evidently contemplated that the trustee thereby appointed, Mr. W. H. Clnitlield, should hold the title to such lands as might be acquired under the agreement, dispose of the same to the best advantage possible, and convey the same, when sold, by his individual deed. The only limitation placed upon his powers was that he should not sell any of the land for less (han one dollar per acre without the consent Of all parties in interest. The trust so created plainly belongs to that class of trusts where the beneficiaries acquire no estate in lands held by the trustee until after they are sold, when their rights attach to the proceeds of sale. It was one of those agreements which operated to convert into personalty the realty that might be purchased, so far as the parties to the speculation were concerned, until, by mutual agreement, they had otherwise determined, inasmuch..as the title to the land acquired was taken in the name of the trustee for the express purpose of enabling him to sell it without let or hindrance, and to divide the proceeds among those who might become 880 interested in the speculation. Nicoll v. Ogden, 29 Ill. 323, 377, 378; Greenwood v. Marvin, 111 N. Y. 423, 19 N. E. 228; Pom. Eq. Jur. § 992, and cases there cited. For these reasons, the plaintiff was not entitled to a decree adjudging that he was the owner of an undivided interest in the property, as a decree of that nature would very likely interfere with the dominion over the property which the trustee is entitled to exercise so long as he acts in good faith, and is guilty of no dereliction of duty. It is also worthy of notice that the bill does not allege that the' trustee is insolvent, and that the proof does not show that he has been either negligent or inefficient in the discharge of his duties. No right to relief, therefore, arises upon either of these grounds. It is not the fault of the trustee that a controversy has arisen between two of the beneficiaries as to the extent of their several interests, and he is not guilty of any misconduct in refusing to assume the responsibility of deciding that controversy until it becomes necessary to make a distribution of the trust fund. When that time arrives, it is to be presumed that the trustee, for his own protection, will fake the proper steps to ascertain the plaintiff’s true interest in the trust fund. So far as we can see, the only ground upon which the plaintiff can fairly lay claim to equitable relief is found in an allegation of the amended bill wherein the plaintiff avers that he is now ready and willing to pay his proportion of the expenses of executing the trust. On the strength of that allegation, 'it has been suggested that he cannot contribute to the payment of such expenses until the amount of his interest is ascertained and has been fixed by judicial decree, and that it is competent for a court of equity to entertain jurisdiction of the case, and settle the existing controversy, on that ground. With reference to this suggestion, it is only necessary to say that we have become satisfied, by a careful examination of the testimony, that this claim is not made in good faith. We think that the plaintiff has no present intention of refunding to the trustee his proportion of the large sum of money which the trustee has already advanced in paying taxes and otherwise administering the trust, and that a decree determining the extent of the plaintiff’s interest would not induce him to contribute either to the payment of expenses heretofore or hereafter incurred. The result is that the plaintiff is, for the present, at least, without right to equitable relief. The trustee has notice of the plaintiff’s claim, and has thus far shown no disposition to ignore his rights, whatever the same may be. The trustee is also solvent, and the large sum now due to him must first be paid before any of the proceeds of the land can be distributed among the beneficiaries. It is not improbable that the entire proceeds may be consumed in reimbursing the trustee for his expenses, so that it will be unnecessary to decide, either now or hereafter, whether the plaintiff’s interest is one-twentieth or three-fortieths. For these reasons, we think that the circuit court properly dismissed the plaintiff’s bill of complaint, and its decree in that behalf is hereby affirmed.