Bacot v. Heyward

| S.C. | Jan 14, 1875

The opinion of the Court was delivered by

Moses, C. J.

The complaint prays no relief against Mr. DeSaussure, the trustee, who is made a party defendant in the cause. Whatever liability' (if any,) he may have incurred for the entry of satisfaction on the judgment against the respondent, Hey-ward, the appellant, forbears from enforcing it.

The verdict of the jury, on the issue submitted to it, establishes the fact that the trustee “ did assume authority to act for the plaintiff when he made his settlement with defendant.” We can not regard this conclusion as in any way affecting the right of the parties. Whether Mr. DeSaussure did or did not induce Mr. Heyward to suppose that, in the compromise of the jugdment, he was authorized to act for the plaintiff, can be of no material consequence. He could not bind the latter by any assumption of powers which he did not in fact possess. So far as the plaintiff was concerned, it was no element in the case that could in the least operate to the prejudice of his right. If the powers exercised by the trustee did attach to his office, the bare assumption of it, without authority from the plaintiff, could in no way contribute to the confirmation of his act.

The issue passed upon by the jury may be of consequence in one aspect. If it was intended to determine the fact alleged in the answer of the trustee, that, according to the express understanding with Mr. Heyward, the entry of satisfaction was not to conclude the plaintiff, but, so far as it involved his interest, was to be subject to his decision, we can then see its propriety, and, perhaps, its necessity. From the pleadings we must so hold, while we may be allowed to say that it was not framed in words the best calculated to express its purpose.

In January, 1867, by the order of the Court, on a petition for guardianship, in which all the children were before it, the assets of the estate of their mother, derived from her marriage settlement, (which included this bond,) were placed in the hands of the Master of the Court of Equity, and were, therefore, in its custody, and subject to its control. By the order of the Chancellor, of 18th December, 1868, based upon the report of the Master, in regard to the destitute and necessitous condition of the children, whose whole property consisted of this bond and one other, Mr. DeSaussure was substituted trustee under the original deed, ordered to collect the bonds, and, on their recovery, to account with and pay over to the several parties in interest their respective proportions.

Even applying the Statute of Uses, by analogy, to trusts of personalty, the trust, under the deed of marriage settlement, was not executed, because, after the death of the survivor of the husband and wife, the property was still to remain in the hands of the trustee, to enable him to execute the final purpose of its creation, to wit: the delivery “ to the issue of the marriage, or the representatives of such of the issue as may be deceased,” of all the property conveyed by the deed. The order of the Chancellor prescribed the course which Mr. DeSaussure was to pursue in regard to the bond. He was to institute legal proceedings for its recovery, and, when collected, to pay to the several parties in interest their respective proportions of the proceeds. No one was authorized to receive but him, and through him the distribution was to be made. Not until such disposition did the trust terminate. The minority of some' of the cestuis que trust disqualified them from so receiving their shares as properly to discharge the .trustee, and though such of them as were sui juris were in a position to accept their proportions, and thus release the trustee, yet equity does not recognize the partial execution of a trust as destroying or discharging it, but regards it as a whole, only to be determined by its entire execution.

In the decree Ex Parte Gadsden, 3 Rich., 477, which was affirmed by the whole Court, Chancellor Harper, says: “ It was suggested in the cause that, as the trust was for a married woman and her children, as tenants in common, the estate might remain in the trustee, so far as the share of the feme covert was concerned, and the interests of the children be executed in them. The grounds on which I have decided the cause make an answer to that suggestion. The whole fee was conveyed to the trustees, and the estate remained in them, at all events, during the life of Collar, and there is nothing to divest it afterwards. The power to sell relates to the whole estate, and, to satisfy that, the whole estate must remain in them. I was of opinion, however, that in no ease could there be such a partial execution of a use. The estate is one, and must be executed either in the trustee or the cestui que trust. As observed by Lord Hardwicke, in Gibson vs. Rogers, this Court will not make fractions and consider them as trustees for only part of the inheritance.”

The terms of the settlement in Harley vs. Platt, 6 Rich., 310, cannot, in their effect, be distinguished from the language of the deed under which the plaintiff here claims. There the Court held that the trust was not executed on the death of the wife, but remained in the trustee until the delivery of the property to the daughter, on her becoming sui juris, or to some one legally authorized to receive for her.

The appellant (Bacot) was a minor when the order of the Chancellor was made — was absent beyond seas — and his whereabouts unknown when the compromise was effected by the trustee, who was ■without the means of ascertaining his wishes in relation to it, nor did he return home for some months subsequent to the completion, through the consent of those sui juris, who were in reach of the trustee.

The compromise having been concluded, under the circumstances stated, and carried into effect by the entry of satisfaction on the judgment, the plaintiff calls upon the Court to set it aside and require the defendant (Heyward) to pay him his proportion of the bond, which was discharged by the agreement between the trustee and Heyward:

It cannot be questioned that, as a general right, incident to his office, a trustee has no power to compromise a debt on behalf of his cestui que trust. Any other rule would at once destroy all the safeguards which the Courts, both of bw and equity, surround property thus held, and, by freeing the hands of the trustees from the fetters with which the judicial wisdom of years has seen proper to bind them, would allow them to destroy where they should protect. While, however, the general right is withheld, its denial is subject to conditions and exceptions "which qualify the rule. If the Court which is asked to vacate it finds, from an examination of the circumstances under which it was made, that its sanction to the trustee, if previously applied for, would have been accorded, it will recognize it as an act consistent with the principles and doctrines which it enforces, and sustain it where the consent of one sui juris now, as the event has transpired, interested to defeat it, by force of preventing causes, could not be obtained by the trustee.

Mr. Lewin, in his work on Trustees, p. 513, says: “But under particular circumstances, the trustee is held capable of exercising the discretionary power of the bona fide proprietor; for the trust estate might otherwise be injuriously affected. The necessity of the moment may demand an immediate decision, while the sanction of the parties who are beneficially interested cannot be secured without great inconvenience.”

In Sanders on Uses and Trusts, 431, it is said: “It is, generally speaking, a rule that a trustee releasing or compromising a debt due to the trust estate must answer for the loss occasioned by such release or compromise; yet this rule must always depend upon the particular circumstances of the case, for when a trustee, in releasing or compounding a debt, acts from prudential motives, and with a view to benefit the trust property, the Courts will consider his conduct not excusable, but in many instances laudable.”

Perry on Trusts, 436, says: “But there are circumstances where a trustee must exercise the discretionary powers of an absolute owner, otherwise great loss might happen to the estate. The exigencies of the moment may demand immediate action.” The principles thus enumerated have been accepted as the governing rule, applicable to the subject now under examination, in the opinion of this Court, in Smith vs. Prothro, 2 S. C., 373.

If the force of circumstances preclude all opportunity of consultation with the cestui que trust, sui juris, in the particular matter in which the trustee is called upon to act, where the chances of loss appear equal to those of gain to the parties interested in the trust confided to him, his resort should be to the Court for instructions for his guidance. The pressure of the occasion may even prevent this, and compel the trustee to rely and act on his own honest judgment. If the nature of the transaction, though it may even be the compromise of a debt, shows that he was actuated by good intention, and exercised due caution and fidelity in respect to the interests of his cestui que trust, a Court of Equity will confirm what it would, on due application, have ordered, for the result to the trust property, in either event, is precisely the same. “ It is a general rule of equity that what is compellable by suit, or would have been ordered by the Court, is equally valid, if done by the trustee without suit, i. e. without the sanction of the Court.” — Lewin on Trusts, 513, and the authorities there referred to.

In Sollee vs. Croft, 7 Rich. Eq., 45, Chancellor Wardlaw, delivering the opinion confirmed by the whole Court, says : “ It is quite proper to sanction now, when all the parties are represented, whatever the Court should have then authorized, and especially what the Court did then authorize upon sufficient evidence, but not in a form to bind all parties in interest.”

In the case before us the validity of the judgment was subject to the decision of this Court on a question which had attracted great public attention, not only from the very large pecuniary interests which would be affected by it throughout the State, but from the fact that it involved questions of a political character, arising out of the but lately adopted Constitution. The opinions of those who stood foremost in the legal professions were divided — the public, regarding the doubts on both sides as well founded, realized the position. So great was the diversity of views, that the Court of the last resort, in an adjoining Slate, on the very question growing out of the Constitution, reached a conclusion the very opposite to that at which we arrived. If the provision in our Constitution, which forbade the collection of debts, of which the consideration was slaves, had not been held a violation of the Constitution of the United States, the whole judgment recovered by the trustee before us would have been lost. The doubt not only prevailed, but, from the distracted opinions of those in whose legal ability the greatest confidence had been reposed, the community accepted it as well justified by the nature of the question, and adjustments were made by cautious and prudent persons, induced by the great uncertainty which prevailed as to what would be the final judgment of the Court. Under these circumstances, the compromise of the respondents would well have recommended itself to the approval of the Court, if it had been previously sought.

In this view, the judgment of the Circuit Judge must be affirmed, and the motion dismissed.

Wright, A. J., and Willard, A. J., concurred.