19 S.E. 702 | N.C. | 1894
BURWELL, J., having been of counsel, did not sit on the hearing of this case.
The defendant, Dugald Stewart, at Spring Term, 1878, of Richmond Superior Court, was ordered to invest $500, then in his hands, "either in real estate or United States bonds, . . . and receive and pay over the interest annually to Margaret Ann McEachern during her life, and after her death to such of her children as may be living at the time of her death." He loaned the money to his brother, Angus Stewart, who executed to him a mortgage on a tract of land which was already encumbered by two mortgages — one to James C. *235
McEachern for $748, and the other to himself for $1,000. These mortgages had been due for some time and no part of the principal or interest had been paid. The trust fund so invested by the defendant was applied as a credit upon the first mortgage, and as this credit strengthened the security of the second mortgage held by the trustee he was very plainly using the trust fund in such a manner as to inure to his own benefit. The fact that in making such investment he was free from any actual fraudulent purpose is immaterial, as it is an inexorable rule in a court of Equity that trust funds must be managed exclusively in the interest of the beneficiary, and cannot be employed so as to work a benefit or profit to the trustee. 1 Perry on Trusts, 464. "The rule seeks to remove all temptations to the hazardous risk of the funds, and to place it under the supervisory control of one whose only interest, coinciding with legal duty, will be to secure its safety and all its benefits to the rightful owner. The law frowns upon any act on the part of a fiduciary which places interest in antagonism to duty, or tends to that result." R. R. v. Wilson,
Applying these principles to the case before us, it is manifest that the mortgage held by the said Stewart for his individual (372) indebtedness should have been postponed to that which he took as trustee for the plaintiffs (McEachern v. Stewart,
Under these circumstances we attach no importance to the fact that at two previous sales the property brought enough to pay the whole debt, and that afterwards it was sold for an insufficient price and was *236
confirmed by the court. The court was not informed that the purchase was made by an agent of the trustee, and we do not think that such confirmation affects the case. Patton v. Thompson,
We have examined the other points raised by counsel with great care, and find nothing which satisfies us that there was error on the part of his Honor in charging the land with the amount mentioned in the judgment.
Affirmed.
Cited: Wittkowsky v. Baruch,