36 Ala. 354 | Ala. | 1860
No principle is more firmly established in the equity jurisprudence of this country,
To this eminently wise and conservative principle, the previous decisions of this court require us to recognize a single exception — that is, that such executors and administrators as have an interest in the property sold, may purchase at a sale of the goods of the estate, provided there is no unfairness, and the property is exposed to sale in the ordinary mode, and under such circumstances as will command the best price. — Brannan v. Oliver, 2 Stewart, 47 ; Saltmarsh v. Beene, 4 Porter, 283, 295; McLane v. Spence, 6 Ala. 894; Julian v. Reynolds, 8 Ala. 680, 683; McCartney v. Calhoun, 17 Ala. 301; Andrews v. Hobson, 23 Ala. 235-6; Montgomery v. Givhan, 24 Ala. 579, 584-5; Charles v. Dubose, 29 Ala. 371. The existence of this exception has, more than once, been regretted by our predecessors, and a determination manifested to extend it no further. — McCartney v. Calhoun, supra; Andrews v. Hobson, supra; Montgomery v. Givhan, supra. Wc are not, however, disposed to assent to the argument of the appellees’ counsel, that the right of the executor or administrator who has an interest in the property sold, must be confined to personal estate; and in the view we take of this case, we are relieved from the necessity of considering, whether an executor or administrator, whose wife is one of the legatees, devisees, or distributees of the property sold, has such an interest as brings bim within the exception referred to. Before Calloway’s marriage with the widow, she had been appointed guardian
The rule which holds the purchase of the trust property by a trustee to be voidable at the election of the cestui que trust, applies in all its force to guardians, and the disqualification attaches to the fiduciary character, independent of the mode of sale; the incapacity extending as well to judicial or other sales under adverse proceedings, as to those made by the guardian under his powers as such. Scott v. Freeland, 7 S. & M. 410; Patton v. Thompson, 2 Jones’ Eq. 286; 1 White & Tudor’s Lead. Cases. (3d. ed.) 209, 213, 215-16, and cases cited. Hence, the simple fact that the sale, at which Calloway purchased, was made by him as executor, and not as guardian, does not, of necessity, relieve him from the influence of the disabling rule.
It is said, however, that “when the offices ef executor and guardian are united in the same person, he holds the estate in his hands as executor, and does not hold anything as . guardian which is not separate from the assets of the estate, or placed to his account as guardian,” (Davis v. Davis, 10 Ala. 299-300;) and hence, it. is argued, that the trust for complainants, with which the defendant was clothed in his capacity as their guardian, did not extend to the lands sold by him as executor, or in any way impair his right to purchase at that sale. But we think that the argument proceeds upon a mistaken view of the foundation and extent of the rule which disables a trustee from purchasing the trust property. No person can become a purchaser of an interest in property, where he has a duty to perform which is inconsistent with the character of a purchaser; in other words, where a person stands in the situation of a trustee for others, and bound as such to protect the general interests of those for whose benefit the trust was created, in regard to the subject of the sale,’he is incapacitated from purchasing for his own
If Calloway had made the sale as guardian, no oncean doubt that it would be set aside. We do not see any sound principle, on which the mere fact that he sold as executor, and not as guardian, can be held to change the result. The property sold was none the less the property of his wards, because it was in his hands as executor, and not as guardian. The proceeds of the sale were, as he knew, a part of the fortune of his wards, and destined to pass into his possession as their guardian. It was the interest of his wards, as he well knew, that the property should bring the highest price which could be obtained for it; whilst it was his interest as a purchaser, buying it on his own accouut, to bid it in at the lowest sum for which he could got it. Benefit to the guardian, and injury to his wards, would thus keep even pace. Surely, that is a low view of the legal duty of a guardian, which would authorize him to place himself in a situation where it becomes his personal interest that the property which belongs to his wards should be sold at a price below its real value. The very object of the disabling rule is to prevent any such conflict between the fiduciary duties and personal interest of the trustee.
Again ; the defendant, as executor, had as many advantages of superior information as to the situation and value of the land, and as much control of the sale, as he would have had if the property had been held and sold by him as guardian. The superior knowledge which a trustee has the means of acquiring, as to the condition and value of the property, and the power he has to control or affect the sale, occupy a prominent place among the reasons for the rule which disqualifies him from purchasing at his own sale of the trust property. — Ex parte Lacey, 6 Vesey, 625; Ex parte James, 8 Vesey, 337; 1 White & Tudor’s Lead. Cases, (3d ed.) top pp. 198-9, 201, 208, 217. Upon principle, therefore, it seems to us that, where the same person is executor of the will and
In Campbell v. Johnson, (1 Sandf. 148,) a testator appointed two persons his- executors, and the guardians of his children, and devised all his estate to them, in trust to sell for the benefit of his heirs. The land was subject to mortgages given by the testator, under one of which it was sold, and one of the executors purchased. The court held, that the sale must be set aside on the application of the heirs, upon the ground that, in both capacities — as trustees to sell, and as guardians of the children —the executors had a duty to perform in regard to the property, which rendered it inequitable for either of them to become a purchaser. — See, also, Evertson v. Tappen, 5 Johns. Ch. 498, 514; Torrey v. Bank of Orleans, 9 Paige, 650; Richardson v. Spencer, 18 B. Monroe, 450.
Moreover, it appears that Lamar bid off the land for Calloway, under an agreement that it should be subsequently reconveyed by him to Calloway; and that although the executor and executrix reported to the probate court that Lamar had paid the purchase-money, and thereupon obtained an order to make titles to him, yet, in point of fact, no part of the purchase-money was ever paid by Lamar; and that Calloway himself has made no actual payment of the money; but he and his wife, as executor and executrix, were debited with the entire amount, on settlement in the probate court, and the portion to which the complainants were entitled was decreed to Calloway and wife as their guardians, and charged against them in their accountings as such guardians. These facts bring the defendant very near, if not within, the line of disability which incapacitates a party from becoming a purchaser for his own benefit, with the means, or on the
It is proper to remark, that the defendant is not shown to have been guilty of any intentional fraud; nor does the testimony convince us, that the price at which the land was sold was not its full value at that-time. But the rule against purchases of trust property by trustees is inflexibly applied, without regard to the consideration paid, or the honesty of the intent. “It matters not that there was no fraud contemplated, and no injury done : the rule is not intended to be remedial of actual wrong, but preventive of the0 possibility of it.” “ The sale is set aside, not because there is, but because there may be fraud.” — 1 White & Tudor’s L. C. 210, and cases cited; Brothers v. Brothers, 7 Ired. Eq. 156; Saltmarsh v. Beene, 4 Porter, 283, 293.
There is no error in the decree, of which the appellant, Calloway, can complain, (see 7 Rich. Eq. R. 34, 44; 1 White & Tudor’s L. C. 217-18-19,) and it must be affirmed, at his costs.
