53 Kan. 637 | Kan. | 1894
The opinion of the court was delivered by
Numerous assignments of error are made in this case, and many questions are discussed in the briefs.
II. Complaint is made of the refusal of the court to permit the plaintiff to inquire of Overton with reference to the delivery of stock in the plaintiff corporation by him to Lord at the time the arrangement was made for the negotiation of the bonds. In this connection it is earnestly insisted that, as it appeared in evidence that all of the shares of stock issued by the plaintiff corporation were in Lord’s possession at the time of his death, and in the hands of Hubbard, as administrator, at the time of the trial, it was competent for the defendant, on cross-examination of Overton, to inquire fully into all the details of the transaction between him and Lord
In reason there can be no sound distinction between the case of an administrator and that of an assignee, and the prin-
“The general proposition which is maintained, both at law and in equity, upon this subject is, that if any property in its original state and form is covered with a trust in favor of the principal, no change of that state and form can divest it of such trust, or give the agent or trustee converting it, or those who represent him in right (not being bona fide purchasers for a valuable consideration without notice) any more valid claim in respect to it than they respectively had before such change. An abuse of a trust can confer no rights on the party abusing it, or on those who claim in privity with him.” (2 Story, Eq. Jur., § 1258.)
While most of the authorities cited are suits against either the trustee or his assignee in bankruptcy or insolvency, the same equitable doctrine was applied in Smith v. Combs, 24 Atl. Rep. (N. J. Ch.) 9, which was a case against the administrator of an executor who had used funds belonging to his testator’s estate, and the court places its decision on the ground that trust property is specifically held by the trustee for the owner, and not as his own property or for the benefit of his creditors. We concede that, if the proceeds of these bonds were in equity a part of Lord’s estate, the rules prescribed by the statute would govern. It is said that, in selling the bonds, Lord committed a fraud on the purchasers; that a fraudulent prospectus was issued and circulated to induce persons to buy. A copy of a pamphlet published by Lord, containing false representations as to the ditch and property of the company, is contained in the record, but our attention is not called to any evidence showing that any purchaser of bonds relied on the representations contained in the pamphlet, or was fraudulently induced by Lord to make the purchase.
We perceive no substantial error in the rulings, findings, or judgment of the court. The decree is affirmed.
After the foregoing opinion was handed down, and judgment entered thereon, a motion for a rehearing was filed and argued. The motion was overruled by the court, and thereafter Horton, C. J., filed his own views of the case, as follows:
I think that the principle announced in Peak v. Ellicott, 30 Kas. 156, and Ellicott v. Barnes, 31 id. 170, ought not to be extended.
In Peak v. Ellicott, supra, it was observed that,
“Wherever a fiduciary relationship exists, and money coming from the trust, lies in the hands of the person standing in that relationship, it can be followed by the principal and separated from any money of the wrongdoer.”
If Lord had real estate at the time of his death which
In order to establish a trust, it must be shown that the estate in the hands of the administrator has been actually augmented by the trust fund; otherwise, the rights of the company are not superior to those of the general creditors of the estate. If a trust is to be established, it must be on the ground that the proceeds of the bonds, not paid over at the death of Lord, have increased his estate, and that such increase came into the hands of the administrator.