2 S.C. 239 | S.C. | 1871
The opinion of the Court was delivered by
If the party insisting here for a priority of payment out of the proceeds of the sale of the mortgaged premises, by reason of the investment of the moneys received by the said T. Savage Heyward, under the will of Miss Ashe, had been his wife, Georgiana, it might have been difficult to withstand the justice and equity of her demand.
The testimony shows that at the time of the purchase “ he was a Director of a bank, was regarded as a man of means, and engaged in a large brokerage business on his own account.” His children were then all infants, and it was his bounden duty to procure a residence for his family at his own expense. The wife died in about one year after the conveyance to him. The interest of the children in the trust fund then became immediate, after which he continued to occupy the premises, with the eestuis que trust, for a long period, but the precise time does not appear.
If the conveyance had conferred on him a perfect and,, unincum-bered title for the benefit of the eestuis que trust, before he could be excused from a breach of duty by the conversion of their money into real estate, he would at least be required to shew that no loss therefrom followed to beneficiaries, whose interest had been confided to his charge.
Mr. Hill, in his Treatise on Trustees, p. 377, says: “So it is unquestionably clear that trustees have no power permanently to convert the nature of the trust property, by laying out money in the purchase of real estate, unless a special authority for so doing is conferred upon them by the trust instrument.”
In the case of Morton vs. Adams, 1 Strob. Eq., 76, Dunkin, Ch., held that a'trustee had no authority to purchase land for, or by such purchase to bind the trust estate ; that “ it was not necessary, and experience has proved it to be inexpedient.”
The power to convert the money into land, unless authorized by the terms of the instrument creating the trust, or permitted by the authority of the Court, is not within the competency of a trustee.
If any doubt existed as to the propriety or soundness of the general principle involved in the rule, what must-be said in a Court of Equity of the application by a trustee of the money in his hands to a purchase of real estate, by advancing, of the fund, the sum of $3.(566.66 as the cash payment, executing a mortgage for $7,333.40, and applying the remaining portion of the trust fund, $962.44, to the payment of the first installment due upon it, leaving it encumbered for the whole balance of principal and interest ?
The bond and mortgage purported to have been executed by the trustee in his representative capacity, and, in his individual character, he guaranteed the payment of the bond. If he even had the right to change the nature of the trust fund, to what power will he
Even where a specific direction is given to invest in real securities, the trustee will only be protected by lending the money, on mortgage, to the extent of two-thirds of their value. — Hill, 368. An advance to that extent will, however, be improper, upon the security of houses or buildings which, necessarily, are of a perishable nature. — Ibid. Here, the manifest inducement to the purchase was a residence for the trustee himself, or for his infant children, which, at his own cost, he was bound to provide, and the whole trust fund was endangered by the amount remaining due on the mortgage being so largely in excess of the trust money advanced by him as the cash payment.
It is not pretended, on the part of the plaintiff, (Mathews,) that he did not have notice of all the circumstances attending the transaction, between T. Savage Heyward and Reynolds, in regard to the sale.
His bill alleges “ that from the portion of the residuary estate which, under the said will, came to the said Georgiana, inter alia, the described lot of land was purchased ; and the said T. Savage Heyward, husband of the said Georgiana, and instituted under the said will her trustee, took the conveyance thereof, in his name, as trustee as aforesaid, and, to secure the credit part of the purchase money, executed the aforesaid bond or obligation, and the aforesaid deed of mortgage and sale.” In fact, the trust under and for which the purchase was made was expressed on the bond, mortgage and conveyance, and gave full information to Mathews, who, by the assignment, occupied the place of Reynolds, through whom he claimed. Whatever trusts, therefore, which attached on the instruments in the hands of Reynolds, were so impressed upon them, when this plaintiff substituted himself in his place with all bis rights, that it constituted actual notice, thereby binding him to all the obligations and liabilities to which his assignor was subjected by the force and effect of the original transaction.
“ It may be laid down as a general rule that a purchaser from a trustee with notice, though for valuable consideration, and a fortiori a volunteer taking with notice, is in equity bound by the trust to the same extent, and in the same manner, as the person from whom he 'purchased.” — Hill, 165; Adams’ Eq., 142; Simons vs. South Western Railroad Bank, 5 Rich. Eq., 270.
The plaintiff submits, in his first ground of appeal, “ that the mort
“Where a trust fund is traced into land, aud the fund constituted a part only of the money laid out in the purchase, the Court has usually given a lien merely on the land for the trust money and interest; but where the entire land is clearly the fruit of the trust fund, the cestuis que trust must, upon principle, have a right to take the land itself, whether the purchase be or not of a description authorized by the trust.” — Lewin on Trusts and Trustees, 762 ;• the same principle is recognized in Adams’ Equity, 142.
In McNeil vs. Monrow, Rich. Eq. Cases, 175, the Court says: “ It maybe stated, as a general rule, that so long as property held in trust, or a trust fund can be traced and distinguished, it will enure to the benefit of the cestui que trust.”
It remains to consider the grounds of appeal presented on the part of the defendants.
The bill, in Heyward vs. Heyward, therein referred to, was filed long after the expiration of-the interest of the life tenant in the trust.
The right of those in remainder to the possession of the fund had accrued, aud it was competent to such of them as were sui juris to excuse or waive the breach of trust on the part of their father, bjr direct and express- agreement, or by such act as would amount to acquiescence.
“ A purchase made by a trustee is not void, but voidable at the election of the cestui que trust within a reasonable time. But if, after notice of the transaction, the latter confirms, or unequivocally acquiesces in the sale, this will be a ratification, both in law and equity.” — Hilliard on Vendors, 398.
Lord Eldon, in Walker vs. Symonds, 3 Swanston, 64, says: “ It is established by all the cases that, if the cestui quo trust joins with the trustees in that which is a breach of trust, knowing the circumstances, such a cestui que trust can never complain of such a breach of trust. I go further, and agree that either concurrence in the act, or acquiescence without original concurrence, will release the trustees; but that is only a general rule, and the Court must enquire into the circumstances which induced concurrence or acquiescence, recollecting, in the conduct of that enquiry, how important it is, on the one hand, to secure the property of the cestui que trust, and, on the other, not to deter men from undertaking trusts from the j>er-formance of which they seldom obtain either satisfaction or gratitude.”
The decree in Heyward vs. Heyward might not, of itself, constitute a bar to the claim of the adults to their proportion of the trust money invested in the purchase of the land. They are not considered as restrained from asserting their original right by the force and effect of proceedings resulting in a decree operative and binding upon them; but their bill, signed by them individually, amounts to a declaration that, with full notice of the breach of trust by their trustee, they assent that, as to the mortgagee, their claim shall be subsidiary to the payment, through the laud, of the amount due him on his debt.
Their bill, to which the trustee was a party plaintiff, sets forth the origin of the trust, the purchase of the premises with the fund in which they had an interest, and recognizing the property as their own, they claim partition of it by sale, and an appropriation of the proceeds, first, to pay the mortgagee his debt, and the balance to be divided among the children entitled. There is here a clear recognition of the purchase for them, and on their account, with a full knowledge and recital of the circumstances under which their trustee obtained the legal title, to their use, of the estate so sought to be subjected to sale, that, after the satisfaction of the mortgage therefrom, each might enjoy his several share in the balance. The effect of it is not only a recognition of the act of the trustee, but operates' as an agreement by which they discharged him from all liability for the conversion of their trust money. When, on the death of the life tenant, the cestuis que trust became entitled, the
It is asking too much of 'the Court to assume that they were under “mistake of law,” and in “ignorance of their rights.” The presumption is the other way ; and he who claims relief, upon the ground either of mistake of law or fact, must prove the existence of it, to entitle him to any relief from its consequences.
The introduction in evidence of the proceedings in Heyward vs. Heyward, at the time they were offered, was a matter entirely in the discretion of the Circuit Court. • The conduct of a case there, so far as relates to the time of the introduction of testimony on the one side or the other, must be regulated by the particular, circumstances then existing, of which the presiding Judge can properly alone decide. So far have our Courts gone in this regard that, in Browning vs. Huff, 2 Bail., 175, and Poole vs. Mitchell, 1 Hill, 404, it was held that it was altogether in the discretion of the Court to permit testimony to be offered by the plaintiff after he had closed his case, and a motion for non-suit had been made and refused.
If the said proceedings had been offered in evidence by the plaintiff in this case to estop the defendants by the effect of the decretal order therein made, their competency to that end might be questioned. They were, however, competent to establish the fact, that the adult defendants here, who were then the plaintiffs, had by their bill waived the breach of trust by the trustee, and confirmed his appropriation of their funds to the purchase of the said real estate. IN or is it to be forgotten, that the said proceedings were brought to the notice and attention of the special Referee, as appears by his report.
If the decree in Heyward vs. Heyward operated through itself to preclude the adult defendants here from any benefit in the fund so misapplied by the trustee, it might have the same effect as to the parties in the cause who were infants at the time it was made. "We do not, however, hold that it is valid, as a bar, oven against the adult defendants, but, as we have before said, they have deprived themselves of the relief they now claim, by- their confirmation of,
The Circuit decree is affirmed, and the motion dismissed.