Gallatian v. Cunningham

8 Cow. 361 | Court for the Trial of Impeachments and Correction of Errors | 1826

Woodworth, J.

Henry Cunningham, the father of the respondent, died intestate in the year 1798, leaving three infant children, and a valuable estate in lands, consisting of two military lots containing 1,200 acres, and a farm in Orange county, containing about 40 acres. It appears that ^ere was no necessity for selling the lands, for the purpose of paying any debts, nor for the maintenance and e¿ucati0n of the infants. Margaret Cunningham, the eldest child, attained the age of 21 years, in September, 1812. At the May term of the supreme court, in that year, and while all the parties were infants, proceedings were instituted by the agency of William Erwin, in the name of Margaret Cunningham as petitioner, against the present respondent and John Cunningham, her brother. The ostensible object was to make partition ; but the real object, as appears to me, after an attentive consideration of the case, was to effect a sale of all the real estate the infants inherited from their father; and by management and fraud, practised under the forms of law, to strip them of at least a portion of their patrimony.

statement c. the case,

Before I proceed to examine the various questions raisec^ I will submit my ideas on one point, which was not much pressed on the argument in this court. The ques* .. . . . _ , ... , .. . tion is this : Does the statute, authorizing the partition of ^an<^s) aPPty to a case where all the parties in interest are infants ? The proceedings in this cause were under the act óf April 7th, 1801, (1 K. & R.’s Ed. 542,) and the *subsequent amendments thereto. The 1st section of the act declares, that it shall be lawful for any one of the parties interested, to present a petition describing the lands, and setting forth the rights of all the parties; and praying that a division be made by commissioners. It directs the manner of service, which shall be on all the parties concerned, and on the guardians of such as are minors. It seems to mé that this section proceeds on the ground that the petitioner is an adult. He is to give a statement of all the rights and titles of the parties. An infant cannot be deemed competent to perform this; and there is no provision that it may be done by guardian; but as to infant defendants, it does provide, that service of the petition may be made on the guardian. If the legislature had intended to include infants under the words, “ any one or more of the parties,” I apprehend the act would not have been silent as to the exercise of this right by guardian. The 6th section, in my view, fortifies this construction. It declares that it shall be lawful for the court, for any of the purposes intended by the act, to appoint guardians for such minors, and take sufficient security from the guardian for the faithful discharge of the trust, and to render a just and true account of his guardianship- It is evident that this section has reference only to the case where infants are obliged to submit to a partition, in consequence of proceedings commenced by a party in interest of full age. The 1st section allows service to be made on the guardians of such of the parties as are minors; and the word “ minors ” is not again used in the act, until it occurs in the 6th section. There the power is given to appoint guardians: for whom ? Not generally, for any of the parties in interest, who are under age, but for “ such minors'' The sentence cannot, grammatically or according to common sense, apply, to any other description of persons, than those described in the first section, which are infant defendants only. I think this goes far to show the sound construction to be put on the act; for it will be conceded, that if an infant is authorized to become a petitioner, a guardian for the protection of *his rights is equally necessary, as in the case of infant defendants. The omission to provide for it shows, manifestly, that the act was not intended to apply to such a case.

The statute partitton^of lands, does not apply to a case where all the terest8 are infants.

- This construction is supported on various other grounds. Generally speaking, there is no benefit arising from a partition, so long as all the parties are infants. During minority, they are incapable of aliening, whether they hold jointly or in severalty ; but they are all entitled to a just proportion of the rents and profits. What then is the use of dividing the estates of infants in severalty ? If done, they are still incapable of exercising any greater power of control than before the severance. When any one of the infants has attained full age, then the right to have partition becomes perfect; and the fact that the other parties in interest are infants, ought not, from the nature of the case, to form an objection. Then, and not till then, the , ’ , . 1 ’ statute becomes operative.

It may be said that a sale of the whole, or a portion of patrimony of infants, is sometimes necessary to provide for their education and support. Be it so; a partition is not required. During infancy, the rents and profits of the estate of the ancestor are to be applied for the benefit of the infants generally. They are entitled to participate equally; and if, on application to the proper forum, a portion should be deemed necessary to be sold for maintenance, it would not be the share of one of the infants, but so much of their undivided interest as the occasion required; so that no advantage can be derived from the partition of their estates. The whole history of the law shows with what jealous care the rights of infants are watched and guarded. On application to the chancellor, affecting the disposition of their property, every check that prudence can suggest, is inter? posed for their protection. In no case can their real estate be aliened, without some pressing necessity. The presumption derived from this source is very strong, that the legislature did not intend to depart from this salutary course, when the act for the partition of lands was passed; and although the words of *the act are general, its spirit and the mischief to be remedied are opposed to the construction that infants are included.

This view of the subject acquires additional strength, when it is considered that there is no saving or qualification in respect to infants. The proceedings become final and conclusive, unless reversed for error. Besides, the power of selling, instead of dividing, is given whenever it shall appear by proof, that a partition cannot be made without prejudice to the owners. To see how easily such a power may be abused, it is only necessary to look into this cause, where it was pretended that two military lots of 600 acres each, could not be divided among three proprietors, without great prejudice; and on that allegation the whole was sold.

For the purpose of placing this question in a still clearer point of light, I will briefly notice the law relating to partition in England, and what was the law in this state until the passing of the first act on the 16th of March, 1785.^[1]

At the common law, co-parceners were compelled to make partition, which might be done by writ de partitions faciendo,, or by proceedings in chancery. By the former mode, if the tenants appeared, the partition was conclusive, although all the parties in interest were infants or feme coverts ; but the appearance could not be compelled with certainty ; for process was by summons, attachment and distress infinite. If the proceedings were instituted in chancery, the partition might be made ; but infants and feme coverts were allowed, after disability removed, to question the justice and equality oí the partition. An infant plaintiff, however, is always concluded.

How this was

Joint tenants and tenants in common were not, at the common law, compellable to make partition. The statute, (31 Hen. 8.) authorized it to be made in the same manner as • • • between co-parceners; but did not provide any additional remedy in case of non-appearance. To remove this difficulty, the 8 & 9 Wm. 3 was enacted, and prescribed a ^course of proceeding variant from the common law process; which being had, an appearance might be entered, and the partition perfected; but this statute contained a proviso, that in all cases where judgment was rendered by default against infants or feme coverts, one year should be allowed after the disability removed to object to the partition. Thus stood the law in England, at our revolution; and it continued to be the law0here, until the 16th of March, 1785, when the first partition act was passed. This is evident from the fact that the law relating to partition in England was the law of the colony of Hew York, and by the 35th section of the constitution, it is declared, that the common law and statute law of England, that formed the law of the colony on the 19th of April, 1775, should continue to be the law of this state, subject to alterations by the legislature.

History of the ytio^Engiish and Hew Y ork»

It is then perceived that effectual and conclusive partition could not be made in certain cases, if judgment was rendered by default. When all or any of the parties were infants, it was liable afterwards to be reviewed. .To insure that alternative, it was only necessary to let such default be entered; and that was altogether at the option of the infant, or feme covert; and in case all the parties were adults,, the remedy provided by the 8 & 9 Wm. was ineffectual. It declares after attachment returned, and affidavit that notice has been given of the writ of partition to the tenant to the action, and a copy left with the occupier, or if not to be found, delivered to the wife, son or daughter of the tenant, being of the age of 21 years, or to the tenant in actual possession, by virtue of any estate of freehold or for term of years, at least 40 days before the return day of the attachment; then, if an appearance shall not be entered in 15 days after such return, the court may proceed to examine the title, give judgment by default, and award a writ to make partition. It follows, that if the parsons upon whom notice is to be served, cannot be found, the proceedings are at an end.

Immediately after the revolutionary war, when the greater part of this state was a wilderness, and its cultivation *andimprovement an object of the greatest importance, the legislature applied a remedy to the extent that the exigency required. The recital to the act of March 16th, 1785, states, that tracts of land held by joint tenants, tenants in common and co-parceners, cannot by law be divided by reason of the absence, infancy or coverture of some of the proprietors. It was so. I have shown that absence was an insuperable barrier; for, in that case, notice could not be served; and as to infants, it depended on their volition, whether to suffer judgment against them by default or not It was therefore correctly said in the recital, that in case of infancy and coverture, land cannot be divided, that is, with certainty and conclusively, when the validity of the partition depended on a contingency.

The preamble is the key to discover the intent of the statute. Why is it confined to the infancy of some of the proprietors, instead of saying where all or any are infants ? The answer is plain and-palpable. It was useless to com? r' . „ . „ pel partition when all were infants; it would not benefit. the agriculture of the country ; for the incapacity of the infant is the same after as before; nor could any- detriment arise, by suffering, their lands to remain in common until some one attained full age. The legistature, therefore, designedly, and I think wisely, provided for effectual partition, when a part only of the owners were infants. The occasion did not call for more than this; and to this the preamble is directed. I' cannot,. therefore, doubt as to the construction of the act. It does not,- nor was it intended to apply when all the parties are infants. The statute of 1801, varying only the form of proceeding, must receive a similar construction. I think the books very clearly sustain the view of this case, which I have so far taken. (16 Vin. 221, (E 1.) pl. 10; id. 227, pl. 10; Co. Lit. 171, a. b; id. 168, b; 5 Vin. Suppl. 336; 2 Ves. Jun. 124.; 1 Laws N. Y. (J. & V’s. ed.) 202; 2 Com. Dig. 647. (4 E.) 5 id. 168, (C. 9.) Ambl; 197; 3 Bac. Abr. 702, 703.)

The statute of 1801 may, and I think ought to be considered, as a substitution merely for the former act. It is ^founded on the same reasons, and has in view the same ends, variant from the former act, principally in the form of proceeding; the remedy'by petition and notice, to which the parties might plead, being a manifest improvement upon the former system.

It is an established rule, that all acts in pari materia are to be' taken together. So, also, if anything contained in a subsequent' statute, be within the reason of a former statute, it shall-be taken-to be within its meaning. (6 Bac. 382; Lord Ray. 1028.)

It cannot be denied, that the same reason existed for the exception, when all were infants, at" the time of passing the last act, as at any former period. It would, therefore, be doing violence to well settled rules of construction, to say, that because there is not an express exception in favor of-infants, therefore they shall be included within the general Words.

In the cause-of Jackson v. Woolsey, (11 John. 446,) the question was raised and argued, whether the statute authorjze(j a petition during infancy, but in that case one of the r ,.lx , , . •, petitioners was an adult; so that the point now under con¿deration was not expressly decided. But it is very evi dent the court were of opinion that the statute did not apply when all the parties were infants. In the opinion delivered, the court observe, that the fact that one of the petitioners was an adult, put the objection at rest. If, then, that fact rendered the proceedings valid, there cannot be a doubt, that in the absence of it, they would not have been considered as within the act. It seems to me, therefore, to follow, that the proceedings commenced in the name of Margaret Cunningham, an infant, were void and coram non judice; and consequently, the appellants did not acquire ° , -1 . any interest m the lands, by virtue or the mortgages and conveyances made by William Erwin, and that, for this cause, their bill was properly dismissed.

ingsTin^parfr tiou were conmnonjudice.

however, it be admitted that the statute applies to this case> next inquiry is, whether the proceedings under it were not irregular, and therefore void.

Whether proregular3 Were

*The act of March 8, 1811, (sess. 34, ch. 43,) declares, that if the commissioners shall report that the lands are so circumstanced that a partition cannot be made without great Prejudice to the owners; and if it shall appear by satisfactory proof to the court, to which such report shall be made, that the lands cannot be partitioned among the owners without great prejudice to their interests, the court shall order the commissioners to sell. Before the passing of this act, no such authority was given. The power of the court was restricted and limited. Satisfactory proof, then, must be adduced. In the absence of proof, the question is not before the court. The distinction here arises between proceedings void and voidable. If proof, evidently defective, had been exhibited, and the court'had passed upon it and deemed it sufficient, that would have been error; but that cause would not have defeated a purchase, in other respects valid. When the court undertake to dispense with a condition precedent, upon which solely their authority is founded, then the act become void; for the statute must be con-Stoned as prohibiting the exercise of any authority over the subject, until the preliminary step has been taken. It is not pretended that there has been a compliance with the Statute in this respect. The rules in" partition ought to be moved in open court. This amendment of the statute may not, at the moment, have been adverted to. I think, however, the presumption more natural, that the rule was handed to the clerk to be entered without the inspection of the court, rather than that they sanctioned the rule. Whether with or without their approbation, the result is the same. There was no authority to sell the land.

.They were no proof given tutoress6 Sg4 ed 33, that a sary7a3neCeS"

The next question is, whether, on the supposition that a partition might legally be made, the proceedings were not fraudulent; and secondly, if not, whether William Erwin Was not a trustee, and, therefore, could not purchase?

Whether proceedings were fraudulent, or Wm. Erwin a trustee.

With respect to fraud, the distinction between legal and equitable jurisdiction, is tins: that at law it must be proved, not presumed; so that equitable jurisdiction may be exercised, *when a court of law could not enter into the question. (18 Ves. 483.) A variety of cases have been decided, and relief afforded in equity, where, From the nature of the transaction, and the situation of the parties, fraud and imposition might be presumed. (3 P. Wm. 139 ; Pow. on Con. 31.) Thus, in Chesterfield v. Jansen, (2 Ves. 155,) lord Hardewicke describes one species of fraud, which may be presumed, from the circumstances and condition of the parties contracting; and this, he says, goes farther than the rule at law. Let these principles be applied to the case before us. By the pleadings, it does not appear, nor is it any where alleged, that William Erwin had ever been appointed guardian of these infants, until May, 1812, when application was made for partition. It is true, the notice served in March, 1812, is directed to William Erwin as guardian, but that fact is not put in issue. If he was not guardian at that time, he was a stranger and intruder. If he was guardian, he violated his trust, as will be shown in the sequel. The father of the respondent left to his three children a valuable real estate, not necessary to be sold for the payment of debts, or for their education or maintenance f ;120O.acres of -wildland in the military .tract, inereas* ing un-value yearly,- we have; a'right .to presume .from, its , . . , .. . . „ , location;, and. the rapidly -advancing prosperity of .that, part Qf the- ,state; ;40. acres with-, buildings in the county of Orange. Erwin applied- to Margaret, then nearly 21 .years of age, advised to a division, and prevailed, on .her to call on.a:lawy.er, and sign' the necessary ■ papers. Ho suggestion is made-that a sale is!even in contemplation. He -becomes the actor and director of Margaret,, and,at. May term, 1812,- procures-himself to. be-appointed guardian,.for the defendants. On the'7th"May,'the .petition, is filed.. On- the same day"-he files a plea -of'confession,..and obtains arrule that partition be made." - The commissioners-appear to have been in waiting, and are sworn on the 7th May. - The next day they .-report that a partition cannot be .made without great-prejudice, -and thereupon a rule was entered-directing a sale, * which was made on the '20th of - July; 1812. After this statement, can-any one doubt what.wasthexeal.inducemeat- of Erwin .to solicit Margaret to apply for a partition ? Did it first occur to him on the 7th May,- that a; sale would be- necessary? The proceedings followed each other .in such rapid succession, as to make it evident .the discovery was -not-then-first made.. Ho ; the plot then began to.develope itself. It discovers -the cunning and management by which this farce had been gotten up. . Every thing was prepared for immediate execution. Forbes, the surety for Erwin, is appointed .one of the commissioners. ■ The knowledge of this fact was undoubtedly withheld fromthe court. If known, he would not have been appointed, for he did not stand indifferent; The less produced by.the sales,-the less his responsibility. . The other two commissioners are near relations of Erwin; a circumstance, perhaps, not material in a fair case, but suspicious when connected with other facts disclosed. All -these arrangements were admirably calculated to "effect the -ultimate object, to enable the guardian to become- the-, purchaser, without -advancing in the first instance a cent. -He, as guardian; was entitled, to.receive from the.commissioners the money produced by the sales. He intended -to purchase at auction the -wild lands, distant-300-miles, which could scarcely fail of being fieed;- arid profit by.their sure and certain rise. -Tins the picture presented. Such1 are the features of this case. A more palpable fraud.attempted to be sanctioned under" the forms of" law," has never"fallen under my observation. For this cause I hold, that so far as-William Erwin is concernéd," the proceedings are void.

Distinction between legal and equitable jurisdiction of fraud.

Evidence to warrant inference of fraud.

Concludes that are^Toid^for fraud m fact-

If the proceedings had been- thus" far regular and fair, Erwin was a trustee,- and could not profit by the purchase rr — —, . * , of the lot of 600 acres. He gave bond for the faithful discharge of his trusts, and received the money arising the sales. Erwin must be considered as having caused the lands -to be sold,-and the cestuiqm trust' is- entitled, as of course, to have the purchase set aside. It is true, as a general proposition, subject to some exceptions, that trustees, *agents, commissioners and-assignees -of" bankrupts, solicitors to the commission and auctioneers,* are incapable of purchasing. The ground on which the disability - or disqualification* rests, is, that a-person cannot be both judge and.party. “Ho man can serve two-masters.” He that is intrusted with the interest* of others, cannot be allowed to make the business an object of interest to himself; because, from the frailty, of human- nature, one who has the power will be too-reádily seized-with-the-inclination to use the opportunity for serving his own interest at the expense of those for whom he is intrusted. A purchase by a trustee, whether for adults or infants, cannot be supported, although the estate be-sold at auction, or before -a master under a decree for sale. . (Yorkbuildings v. Mackenzie; 6 Bro. Par. Ca. 42 ; 5 Vesey, Jun. 681; 1 Mad. 90; Sugden's Law of Vendors, 422, 427, and the' cases"' there cited.) A very. elaborate and learned review of nearly all the cases, will be found- in Davoue v. Fanning, (2 John. Ch. 252,) where the general" principle is examined and illustrated" with great perspicuity, and to an -extent which would seem to - have exhausted the subject.^[1]

Erwin was a trustee, and the sale should be set aside for cause-

ag^purchases by trustees, '

The next inquiry is, how are the appellants affected by the fraud of William Erwin, and the purchase by Mm as a trustee? If they are fair purchasers, without notice, and have brought themselves within the rules by which that question is tested, they are not affected by the fraud or trust. The respondent filed a cross bill, stating the proceedings in respect to the partition and sale; and charges, that the appellants were well informed of all the material facts and circumstances, and also, that Robert Wood and Charles Warded, before and at the time they received their mortgage, had notice. The appellants admit that Erwin was appointed guardian, and became a purchaser. The language of the appellants in the first answer, is, that they cannot say whether Wood and Warded had notice when the mortgage was given. In the second answer, they say they deny that, at the several times, they had actual' notice *of the proceedings, and of the claims of the respondents.

How the appellants are affected by the fraud of Wm. Erwin, or his relation as a trustee.

If a purchaser rests his claim on the fact of being an innocent bona fide purchaser, he must deny -notice, even not charged, positively, and not evasively, He must deny fully, and in the most precise terms, every circumstance from which notice could be inferred. (Pre. in Ch. 226; 2 P. Wms. 491; 1 John. Ch. Rep. 302 : 3 id. 345.)^[1]

To make purchase, nodenie™USt oí tively,’ even charged, "so of every drcumstanco from which it can be inferred.

It requires only a perusal of the case, to perceive that ^ the appellants have not protected themselves, within this strict and salutary rule. The testimony of Wardell and Wood, as to their want of notice, cannot aid the appellants. It was not necessary for the respondent to make an effort to prove notice to them, for the reason, that until the appellants had explicitly denied knowledge on the part of Wardell and Wood, they could not avail themselves of this defence.

The appelthem*’ selves within

waa not put.missue. Evidence concerning it, ¡nadmissibi&a3

„ But it is contended, the respondent and Margaret Cunningham have confirmed the acts of Erwin, and cannot be permitted to impeach their validity ?

As to the confirmationo, Erwin’s acts.

TTT- i , . , . With respect to .the respondent, it is only necessary to observe, that the assignment of the mortgage to her, against Mattison, was taken while ignorant of her rights ; and was received only as a collateral security. Her case, therefore, does not fall within any Of the principles respecting coriilr» mation. As to the other infants, Margaret and John, they are not parties in this cause, and cannot be concluded by georee- The fact is merely stated, that shortly after the sale, Margaret received from the comiriissidners -her share of the purchase money, and ¡that iri 1816, John presented a petition to the chancellor, and received his'share. It is no where alleged or pretended, that either o!f them had any knowledge of the fraud and trust, and that -the proceedings of William "Erwin were -not entitled to the sanction of a court of justice. Besides, the question Of confirmation applies only'to the purchase-by the trustee; that being a subject of confirmation. If -the previous proceedings *were fraudulent and void, it was incapable of confirmation. In Gok. Lit. "295, b., the doctrine-is -laid down, that a confirmation may make a -voidable or-defeasible estate good; but it cannot strengthen a void estate. (5 Vin. 389, (Y.) pl. 5, S. P.) Whatever .these .parties may have received, a court of equity will compel -them to -account, when they appear "to assert -their-rights to the -real estate of their "father.

A void -purpable of confirmation.

From the preceding view, it will.be seen thát the claim of the appellants to attach their mortgages and conveyances on two thirds of-the lot, has no foundation to rest on. .The appellants, -in judgment of "law, acquired-no ¡title to any part of the'lot. The respondent here is acting on the defensive. It is "enough that she has shown the absolute nullity of the appellant’s claim. The question, whether the court will decree that the'whole lot isdiable toiher demand, or one-third only, does not now arise. 'When the -respondent presents that question fin the character of a .plaintiff, it will receive a-decision.

F ara 1 °f opinion that -the decree of his honor, the ¡chancellor, be affirmed.

For affirm•nce.

■Sutherland, J., - expressed his concurrence imthe -result of this opinion.

'Savage, Gh. J., not having "heard 'the argumetit, -gave no opinion.

Colder, Senator.

The facts submitted to us in this case, show, without-contradiction, that an infant, by the conduct of a person- who procured himself to be made her guardian, has been deprived of the whole of her inheritance: that this has'been effected through the instrumentality of a court of law; and we are now to decide, whether the legal forms by which it has been accomplished, preclude redress.

iwai T;ew oftiie ease-

It is"impossible to Consider' this question, without» strong anxiety to rescue- the administration of justice from the reproach which it Would seem to deserve,' if.we should be obliged to acknowledge that our courts may be rendered *the instruments of such injustice; and we must feel" the greater regret, should we be obliged to decide that-the wrong is without remedy, when we reflect that the injury arises out of the- sacred relation of guardian and ward, which .the courts themselves create.

But it is the duty of a judge to control his- feelings. He is to administer law as he finds it established, and not as he may wish it were, or thinks it ought to be, in order to' meet- particular exigencies or hardships. .

A judge ought jaw- without regard to parcies.

It is to be considered, also, that, in this case,, the-question is not nowbetween the guardian and his ward. Bights . . . , of third persons intervene. ' These persons insist,, that however exceptionable the conduct of the guardian may have been, their title is valid; because- they are-purchasers from persons who had no notice that he who conveyed to them was guardian when he acquired his title. If this be so, the appellants must be-protecte'd, although it be at the expense of another innocent party, -

. Question n,ffects third Pe{sons, appellants, claiming g™™ alleged to have

if so, the apbe protected!"1

In my view of this case, there are many points which have been argued at our bar with great zeal-and ability, that I do not think it necessary we should decide. I shall not consider whether there be evidence that" the :proceedings of the supreme court were fraudulently conducted by the parties to'the partition suit. Neither doesdt-appear to me to be necessary to decide on what day of the week the order for sale was entered, nor what would be the cansequence, if it were entered on a Sunday. :My decision will rest on the single fact that the guardian was the purchaser,

Many points examine,

Decision rests chaser.

If the purchaser under the partition sale had not been the guardian, I think his title could not be impeached on the ground that the proceedings m that suit were unwar rantabIe.. in Bennett v. Hamill, (2 Sch. & Lef. 577,) Ld.’ Eedesdale says, “ A purchaser under a judgment or decree, n°t bound to look through all the proceedings, from the beginning to the end; and to see that they are right in all their parts. On the contrary,” says he, “a purchaser has a right to presume'that the court has taken the steps necessary to investigate the rights of the parties; *and has properly decreed a sale.” This doctrine is maintained by our court of chancery, in the case of De Riemer and Cantillon, (4 John. Ch. Rep. 85.) t

Otherwise not^Te °°d!d feated.

But the purchaser under the partition sale was guardian'; and let us, for a moment, suppose that he was the only party in interest before the court. Then the question would be, whether a guardian who purchases lands of his ward, under a sale to which he assents, can hold the property against the will or claim of his ward.

There is no principle better settled, nor one more ealeu¡aj¡ed to defeat that cupidity which is so apt to seduce men r 1 , from a disinterested and honest course, than that a trustee shall never be allowed to claim and to hold as a purchaser, property which was the object of his trust, against the will Q|. tbe cestui yUe ¿rusi_ Indeed, the just jealousy of the law carries the rule further. It will not permit an agent or attorneyto hold, against the will'of his principal or employer, anything which was in litigation, of which litigation he had ,, the management.

A trustee cannot purchase and hold the subject of gainsfthe will of his^ cestui gw rus.

agent oratto¡> ney, as to any thing which he litigates.

The sale to the trustee or agent is not absolutely void; but may always be avoided by the cestui que trust, or by the principal, unless long acquiescence, with knowledge of their rights, warrants a presumption that they approved and ratified the sale. • .

It is upon this ground that I take the distinction-between e^ect the proceeding of the supreme court as to .the order for partition and sale, and the order confirming the sale to William Erwin, who was the guardian. The partition and order for sale may be conclusive, but the confirmation not so ; at least not so conclusive as to preclude the ward from setting aside the sale. , The decree of the court of chancery, which refused to permit the guardian, or those claiming under him with notice, to have the benefit of the sale, is perfeótly consistent with the proceedings of the supreme court, even supposing that they confirmed the sale to William Erwin, knowing.that he was the guardian. The order of the court for partition is not dis-. turbed, and the sale to the guardian is confirmed, so far *as we are bound to believe the supreme court could, or intended to confirm it; that is, subject to the equity which the ward has to" set aside the sale, within a reasonable time: so that the court of chancery may set.aside the confirmation of the sale to the guardian, without conflicting at all with the supreme court. In the case of Campbell v. Walker, (5 Ves. 680,) the master of the rolls, speaking of a sale made by a trustee, a sale which was acknowledged to be perfectly fair, which was made at public auction, and to the highest bidder, uses language which courts should forever sound in the ears of all guardians and trustees: “ I wish trustees to understand,” says he, “ that any trustee purchasing the trust property, is liable to have the purchase set aside,, if, in any reasonable time, the cestui qué trust chooses to say he is not satisfied with it. The trustee purchases subject to that equity.”

Distinction partition and order of sale, <5raing sala”

But it is said, that however this may be applicable to an ordinary trustee, it does not apply to this particular case of a guardian under our act for the partition of lands, In my opinion, if we attend to the reason of the rule, we shall find it more applicable to this case than to any other..

Rule cHaquatee’A& topuiv chase, extends ad ufan under

He who undertakes to act for another, shall not, in the same matter, (says one of the books,) be permitted to act for himself. How, throughout the proceedings in partition, the guardian undertakes to act solely with a view to the interest of his ward. If he may acquire an indefeasible title by a sale, he may be acting for himself. He may. be endeavoring so to shape the proceedings, as that he may make a bargain out of the estate. Upon the report of the sale," the court is to look to the guardian for information, whether or .not it is to the- interest of,the.-ward that the sale be .confirmed. If the. guardian does not dissent,- hut is- silent, ¡as he;- was in this ease, * a. confirmation • is a -matter. 0£ course.

. In.Scotland, whenever there is a judicial.=sale, *a..person who is* -called; an agent, :is.-.appointed* by the -, court, torascertain, and to; inform thern as. to the1 value of the property tc be sold. "In the ease of McKenzie, (6 Ves. 630, note (b) the British house of:lords set aside,;after the .lapse.of-a. *great number of years,, a purchase under an. order of1, sale made*by the -court: ofsession, by one of. these.-agents ; the lord.chancellor saying, that , he who was interested by the court to- instruct them how. to. sell, should not be permitted to acquire-a title .under the-authority- ef1 the court.

"We-are,* however, referred to:a< direct-decision,-.as is.said, of the . supreme. court,: on the very, poiñt now.under- consideration. (Jackson v. Woolsey, 11 John. 446.) ..If.I understand that. case, it does not ; at, all impugn the. principles, which the other cases, as it appears*to. me, ¡so. firmly, establish; ,Mt the report of that Lease ¡is not -very, perspicuous,' and I am- not very certain that-1 understand-it. 'We have, in the.report, the title to-the proceedings". in .partition which were in* question. ; It is stated that the.infants: appeared by William Giilspie, as- their--guardian. The saléis represented to-have been: to Matthew Gillespie; and yet'it is certain,- that-both- the counsel *and court-assume ;as-a fact, that the. sale was to the guardian. Again *r I do; not understand, that in this suit of* Jackson v. Woolsey, the wards were endeavoring-to set aside a sale to, their-'guardian. *Thewards were the heirs of Jane Gillespie. The sale -was" the .estate of the infants,- which they had inherited 'from1 her;; and - nnder a commissioner’s deed consequent". on-thafc sale,' the defendant, Woolsey,'- 'claimed. The lessors of ¡the .plaintiff were the heirs- of James -Neely. Now,- if * in Jackson v. Woolsey, it was not the-wards who were endeavoring to-set- aside the sale to-their, guardian, then thedoctrine of-that ease is entirely coincident with, other-cases on the-subject: for it is-admitted,: that a-sale-to a - guardian, or trustee is not-absolutely'void,-but is1 only voidable: and,, unless fraudulent, can be,impeached by no one but a ward, or a cestui que trust.^(a)

*But if we .are -to understand, the supreme court as deciding, as a broad and general principle, that “ the sale to the guardian conveyed .a title to him - which could not be impeached by the- ward,-.because -there was.no fraud, and because the sale was public-to the highest bidder, and made by .the commissioners, according.to the order of the court,” then I feel-myself , constrained, to dissent from-that decision.

I hope, that in any thing I shall ever say or do, I shall-manifest.the unfeigned deference I feel for the members of the court-which pronounced the- decision in the case mentioned. But we are to take care that our respect for any other tribunal, does not lead us to forget that this is a court of appeal, and . that it would be a mere mockery if any other adjudications than those pronounced here, were to have more influence than belongs to the abilities, learning and wisdom of those to whose judgments we are' referred.

The question, whether a, trustee, guardian or agent can, by; purchase, acquire an indefeasible title to property to which his trust, guardianship, or agency relates, is one upon .which we. are. not distracted with a contrariety of opinions.. I have looked with diligence, for all the cases reported which touch this question. Most- of those decided in England, are referred to by Maddoek, in his .chapter on -frauds. (1 Mad. 111, last ed.) I think I may venture to say.there is not one single case, either in the English or’ our own books, (unless Jackson v. Woolsey be an exception,) which does, not support the general rule, as I have above stated it to be.

But it is said it may be -very, injurious to an infant, if the guardian be, in no case, allowed to purchase and hold the ' property of his ward. The law, however, has provided against this inconvenience. A trustee or guardian may ma]íe a special application to the court of chancery, stat* ™g why it would be to the interest of his ward to permit to pUrohase 0r to permit him to hold property which r ' f 1 1 J he has purchased. His statement must be judicially mvestigated; and, under a decree founded upon this investigation, * permitting the guardian to purchase or to hold, no doubt, he may acquire an unimpeachable title. This is very different from allowing a guardian to purchase in virfue of an order and confirmation under our partition act, where there is no investigation as to the interest of the ward; where no intimation is given to the court that the guardian and purchaser are the same person, and where, ninety-nine times out of a hundred, they would have no knowledge of this fact.

a trustee or guardian may purchase under a special cery?e°fOrUs chase° may be confirmed in 1 way"

As has been said, the ward may confirm the sale, or lose the right to question it, if there be no objection made t0 ^ jn a reasonable time. I will not stop to inquire . . r i whether there was any acquiescence of the ward m this eag& moment she came of age, she complained of the injustice of her guardian’s proceedings; and it would be cruel to construe her acceptance of the mortgage from Mattison, the only fragment of her patrimony which remained, as a confirmation of her guardian’s purchase.

The ward thef sato” by delay; but has not done so m this case, by May or other-

If, then, the guardian was now the party in interest be- ^ us anq he alone was to be affected by our decision, I hope we should not hesitate for a moment to say, that his title against the claim of his ward was good for nothing. I hope we shall adhere, with unrelenting severity, to the rule that a guardian cannot acquire, by purchase, (unless by the means I have before mentioned,) an indefeasible title to property, the care of which is the purpose of his office.

The guardian’s title in between him wat ^good afor nothing.

But the appellants contend that they are purchasers; that is to say, that as to the mortgage given by Erwin to "Wood and Wardell, they hold that mortgage as théir as- . „ 7 • , „ signees. If they are purchasers, they can be m no better situation than Erwin himself would be, unless they establish in a legal manner, that Wood and Wardell had ° , , . _ . - . , . notice, when they took the mortgage from Erwin, that he derived his title under the sate in the partition suit in which he appeared as guardian of the respondent. If Wood and Wardell had notice in any way that this was the title of Erwin, then they knew, as was said in the ease *of Campbell v. Walker, that he took the property subject to the equity, to have the purchase set aside. Then ,we are to decide, whether Wood and Wardell are not, according to rules which govern in a court of equity, to be considered as having had notice, when they took the mort- . . gage from Erwin, that he was mortgaging to them property which had been his ward’s. To determine this question, we are to look to the pleadings only, and to inquire whether the appellants have, in their answer, set up that Wood and Wardell had no such notice. If they have not made this allegation, they cannot supply this defect in their title by testimony. If a person takes a grant or r . J . , . ° f anee from one having, himself, a bad or defective title, the title is also, prima facie, bad or defective, in the hands of the grantee. If it be not so on account of his being an innocent and bona fide purchaser without notice; it is him, or those claiming under him, to maintain that he was such purchaser without notice; and if he, or those claimingbinder him, do not do so, witnesses shall not be permitted to do it for them.

Right of the purchase or assignees examined.

They mugt establish, in a t“e ^¡°gS haii no

not^aily^et UP want of notice in their answer, they ^““defeTvby testimony.

If takes a defective title bad in the hands of the purchaser.

him_ 0r those that the purwithout notice!

If it be said, that the appellants might not know whether Wood and Wardell had notice or not, they might, notwithstanding, set up by plea, if not by answer, want of notice as the ground of defence. They might, at least, have stated unequivocally, that they did not know that Wood and Wardell had this notice. But instead of this, they ’ ^ say in their answer, “ that, whether or not Wood and Wardell, at the time they received the mortgage from Erwin, had notice of all the charges, circumstances, and allegations contained in the said bill of complaint, they cannot set forth from knowledge or information.” “ If a purchaser,” says chancellor Kent, in the case of Denning v. Smithy (3 John. Ch. Rep. 345,) “ wishes to. rest his claim on- thg fact he must deny notice, .although- it be not charged in the bill.- He must deny every circumstance from, which notice could be inferred.” Why must he: do this? Because want of notice is an essential part of the purchasers title; and - unless he, or those claiming, under him, aver ' . _ that he had not notice, -the title is defective. . To vomit an averment, is as fatal as if the-party had omitted ’ , „ to aver any other fact (as the death of an ancestor, for examPle>) essential to a perfect .title.

if the appel^ol/ dld they might have tto'tbeir^asi signors had not have stated mi{, f* knowledge by a&swer.

A purchaser relying on want of notice, ™ust deny -tice, and every circumstance may belnfeíred, whether tibe alleged or

This.being.my opinion on this point, it da unnecessary ^ exam}ne testimony as to Wood-and Wardell being informed, when- they took the mortgage from Erwin, -that his title to the mortgaged premises came from.his.ward. Mr. Wood’s testimony on this point, I think, is quite equivocal. He denies that Wood and Wardell had knowledge that -Erwin had purchased under the partition sale. But he does not say that they had no information on- this subject. He adopts, as to this point, a circumlocution, which leaves -us in much doubt as to what we are to understand from-his testimony. “Heither be-nor-Wardell,” he says, “were-informed of the manner, or from whence Erwin had acquired possession of the land, nor- by what conveyance, or by what authority he claimed title to the same.” But then immediately follows a part of. the testimony of Wood, which, is calculated to create some doubts- whether he means to deny that he had any information • when he took the mortgage from Erwin, that Erwin was mortgaging property which had belonged:to his ward. Wood says, “.that.at about the time of giving the mortgage, Erwin stated that he was guardian to some children; but he (Wood) did not recollect that the respondent’s name was mentioned.”' Then comes this very qualifying. part of' Wood’s testimony, .to wit, “ that he had-but a faint recollection of the conversation that passed between him and Erwin-on the subject.”

I have referred to this part of the testimony, because I think-it illustrates-the good sense of the rule, that a party who means to rely., on want of-notice, either to himself or to any other, must himself aver that there was-no. notice; , , * or, at least, state, that according to- ms knowledge, matron and beber, there was. none. 1 think- this case exemplifies the propriety of not leaving the question to be decided by testimony, independently of any allegation, of the: party himself. Considering the relationship of the appellants- to Erwin, and the intimate- connection-' of' some •of them with him, how satisfaefcory would have, been a declaration- from them on oath, that they had no information- or belief, that when- Wood- and Warded took the mortgage- in question, they were informed that- Erwin was mortgaging to them property which had been his. ward’s.

As For these reasons, I think we must consider that Wood and Warded had notice of the nature of Erwin’s title, to the appellants, if that be of any importance, they unequivocally admit the fudest notice to themselves when, they took the assignment. Though this may not affect the law of the case, yet when* we add to this admission, that it appears they also1 knew that Erwin- was old, and poor, and unable to make bis ward recompense for the inheritance of which he was despoiling her, and that the sale to Erwin was' for greatly less than the property was- worth, there must be less reluctance in giving a decision which will defeat the claim of the appellants.

that the assignors had no-Inference ¡,

I shad not extend the reasons for the opinion 1 shad give in this case, by any observations as to the mortgage toGallatian. The principles which I have adopted as the: mortgage of Wood and: Warded, apply to the other.

Whether the appellants, having taken their security fon a precedent debt, and whether, as assignees of a mortgage, they can be considered as purchasers, are questions which I do not think it necessary to discuss.

Hor do I at ad enter into the inquiry, whether there be proof that there was fraud in conducting the.- proceedings in partition. Consistently with my opinion, it' maybe . , , . sumed, that there was the utmostgood faith mail the parties to that suit. I wish to establish as a principle, and mean to do it, so far as my opinion can establish anything, that if a guardian purchases the estate of his ward, without the special permission of a court, the sale may be set aside while the property is m the hands of the guardian, on the application of the ward, within a reasonable time; an¿ jf the guardian makes a conveyance to another person, the property may be claimed by the ward in the hands of person, unless the holder places himself in such *a situation, as that a court of equity may consider him a bona fide purchaser without notice,

A ward may, Enable ^imeT t0 set aside a fair purchase made by ^ Against every one ex-purchaser^ unless the purder an order saleólo °the guardian.

The only matter that this court can decide on these original and cross-bills is, whether the appellants are entitled to foreclose the mortgage to Wood and Wardell, and the mortgage to Gallaban, according to the prayer of the original bill. We can say nothing as to the shares of Margaret and John Cunningham, because they are not parties to the record. Nor can we say any thing as to the new title set up by John Erwin and Abraham Wood, in their answers to the cross bill, under deeds to them from William Erwin, in 1818. Neither was it in the power of the court below, nor is it now in our power to say to what relief the respondent is entitled. All we can do is, to decide whether the "bill which brought her into court, shall be dismissed or not. . ° My opinion is, that it ought to be so.

againat9 the respondent should be dismissed.

^ concur with the chancellor in his decree as to costs, and am also of opinion that the appellants must pay the of the aPPeaL

A d th peiiants 9 coste d court below and of this appeal.

On the above opinions being delivered, the court voted unanimously for affirmance; but they declined embodying in the decree the grounds upon which they were for affirmance, though this was moved.

Whereupon,

It was ordered, adjudged and decreed, that the decree of the court of chancery, against which the appeal was brought, be in all things affirmed; and that the appellants pay to Catharine Cunningham her costs in this suit, to be taxed, &c., with the usual order to remit, &c.

[1] See Waterman’s American Chancery Digest, vol. 3, tit. Partition,

[1] A trustee cannot act for his own benefit in a contract on the subject of- the trust. Thus, a trustee who purchases a mortgage or a judgment, which was a lien on- the -trust estate, at a discount, is not allowed to apply such purchase to his own advantage, it enures for the benefit of the cestui que trust. Green v. Winter, 1 Johns. Ch. Rep. 27 ; M'Clanahans v. Henderson, 2 A. K. Marsh. 389; Kellogg v. Wood, 4 Paige, 578; Parkist v. Alexander, 1 Johns. Chan. Rep. 394; Holdridge v. Gillespie, 2 Johns. Ch. Rep. 30; Hart v. Ten Eyck, 4 Johns. Ch. Rep. 104; Davoue v. Fanning, 2 Johns. Ch. Rep. 257 ; Matthews v. Dragard, 3 Desau. 25. Am. Chan. Dig., p. 428, sec. 537.

[1] Where a purchaser seeks relief from a court of equity, because ho has purchased without notice, he must deny notice. So when he sets up by plea or answer a purchase without notice, as a bar to discovery or relief to which a plaintiff is entitled, he must be equally explicit in denying it. But where a plaintiff would convert a purchaser into a trustee, and seeks to charge him because he bought with notice, if the allegation of notice is not admitted, the plaintiff is bound to prove it. McGahee v. Sneed, 1 Dev. & Batt. 333.

The ground on which an original purchaser with notice, is estopped in equity, is that the taking the legal estate alter notice of a prior purchase ot equity makes the party a bona fide purchaser, and amounts to a fraud. In order to fix this fraud, however, the proof of notice must be clear. Curtis v. Lunn, 6 Munf. 42.

To make the plea of a bona fide purchaser without notice available, the notice, before the whole of the purchase money was paid and conveyance received, must be positively denied. Nantz v. M'Pherson, 7 Monroe, 599.

Such information as would put a prudent man on the search for the truth, is sufficient notice. Ib.

Want of notice in a purchaser is a matter of defence, which he must aver by way of defence, and establish by proof. Galatin v. Erwin, Hopkins, 48.

He must also deny all knowledge of facts charged from which notice may he inferred. And the denial must be full, positive, and precise. Ib.

If a vendee relies on want of notice in another, he must still aver the fact by plea or otherwise. Ib.

A defendant must deny ail notice and every circumstance from which notice can be inferred, otherwise he will not be deemed a bona fide purchaser. Pillow's heirs v. Shannon's heirs, 3 Yerger, 608.

In order to protect himself as a purchaser, bona fide, the defendant must leny that he had notice of the complainant’s equity, previously to the execution of the deed to him, and payment of the purchase money; and if he had notice before that time, he is bound by it. Ib.

A person claiming as a bona fide purchaser for a valuable consideration, must deny the fact of notice of a trust, and of every circumstance from which such notice might be inferred. Murray v. Ballou, 1 Johns. Chan. Rep. 566; Heatley v. Finster, 2 Johns. Ch. Rep. 168; Murray v. Finster, 2 Johns. Ch. Rep. 155; Quære. Am. Chan. Dig., p. 491, et seq., Nos. 298, 299, 313, 314, 315 316, 317, 322, 323, 325.

(a) Beside; the case was on the law side. Is not a fair purchase by a trustee, of the subject of his trust, valid and binding at law, even as between him and his cestui que trustt Can it be avoided; except in a court of equity? ’ The court decide, in terms,.that the deed, not being-fraudulent in fact, was valid in law. They do not pretend to say how it would be viewed: in equity,

Case Details

Case Name: Gallatian v. Cunningham

Court Name: Court for the Trial of Impeachments and Correction of Errors

Date Published: Sep 15, 1826

Citation: 8 Cow. 361