Newcomb v. Brooks

16 W. Va. 32 | W. Va. | 1879

Green, President,

delivered the opinion of the Court:

The questions presented by this record involve the consideration of the equitable doctrine, that a person who occupies any fiduciary relation to another, is bound not to exercise for his own benefit and to the prejudice of the party, to whom he stands in such relation, any of the' powers or rights, or any knowledge or advantage of any description which he derives from such confidential position. This general principle is universally recognized by all courts. See Whelpole v. Cookson, 1 Ves. Sr. 9; Fox v. Mackreth et al., 2 Bro. C. C. 400; 2 Cox 320; 4 Bro. P. C. 258; Saunderson v. Walker, 13 Ves. 601; Butler v. Haskell, 4 Dessau. (S. C.) 651; Beeson v. Beeson, 9 Barr (Pa. St.) 280; Forbes v. Hasley 33 Barb. 578 ; The Cumberland Coal Co. v. Sherman, 30 Barb. 553; The Hoffman Coal Co. v. The Cumberland Coal Co. and Sherman, 30 Barb. 159; Carter &c. v. Harris, 4 Rand. 204; Buchler v. Lafferty’s legatees, 2 Rob. (Va.) 292; Segar v. Edwards, &c., 11 Leigh 213.

This general principle of a court of equity, has been applied to a great variety of cases; but we will consider only those applications of it which bear most directly on the case before us for our consideration. It has often been held by courts and judges entitled to the highest respect and consideration, that a purchase by a trustee, or party holding any fiduciary relation, of the the trust-property or subject, although he may have given an adequate price therefor and gained no advantage whatever, is voidable at the pleasure of the cestui que trust, or party to whom such confidential relation is borne by the purchaser, and that if at the time of the purchase the vendee occupied such confidential relation, this sale can be set aside by the cestui que trust, or party occupying his position, at his pleasure, whether the purchase was one made directly from them, or was made by the trustee from himself. See Ex parte Lacy, 6 Ves. 627; Ex parte Bennett, 10 Ves. 394; Campbell v. Walker, 5 Ves. 678; Ex parte James, 8 Ves. 348; Shelton v. Homer, 5 Metc. (Mass.) 467; Davoue v. Farming, 2 Johns. Chy. 252; Dobson v. Racey, 3 Sandf. 61; Toney v. The Bank of Orleans, 9 Paige 660, 664; Van Eppes v. Van Eppes, 9 Paige 238, 242; Staats v. Berger, 2 C. E. Green (17 N. J.) 297, 306; Michond et al. v. Girod et al., 4 How. 503; The York Building Co. v. McKenzie, 8 Bro. P. C. (Tomlin’s ed.) 42, 63; Scott v. Gamble, 1 Stock. (N. J.) 218, 237; Johnson v. Bennett, 38 Barb. 250; Wade v. Harper, 3 Yerg. (Tenn.) 385; The Aberdeen Railway Co. v. Blaikie, 1 Macq. 4 L. Cas. 461, 479; Brothers v. Brothers, 7 Ired. Eq. 150; Patton v. Thompson, 2 Jones’s Eq. 288; Scott et al. v. Freeland, 7 Smed. & M. 409; Zimmerman v. Harmon, 4 Rich. Eq. (S. C.) 165; Leisenning v. Black, 5 Watts 303; Mason v. Martin & Kemp, 4 Md. 124; Martin v. Wyncoop et al., 12 Ind. 266; Spindler et al. v. Atkison, 3 Md. 424; Michond v. Girod et al., 4 How. 554; Buchler v. Lafferty’s legatees, 2 Rob. (Va.) 299; Barley v. Robinson, 1 Gratt. 9; Segar v. Edwards, 11 Leigh 213.

The principle upon which these cases all proceed in laying down theTroad proposition, that the purchase by a fiduciary of trust-property will be set aside at the instance of the cestui que trust or any one occupying the position similar to that of a cestui que trust without any enquiry as to the adequacy of the price or fairness of the transaction, is thus stated by Lord Eldon in Ex parte Lacey, 6 Ves. 627. “The rule is founded on this : that though you may see in a particular case that the trustee has not made advantage, it is utterly impossible to examine upon satisfactory evidence in the power of the court (by which I mean in the power of the parties) in ninety-nine cases out of a hundred, whether he has made advantage or not. Suppose a trustee buys an estate, and, by the knowledge acquired in that character, discovers a valuable coal mine under it, and locking that up in his own breast, enters into a contract with the cestui que trust. If he choose to deny it, how can the court try that against that, denial ? The probability is, that a trustee who once conceived such a purpose will never disclose it, and the cestui que trust will be effectually defrauded.

Justice Wayne in delivering the opinion of the Supreme Court in Michond v. Girod et al., 4 How. 555, thus states the reason on which this rule is based: “The general rule stands upon our great moral obligation to refrain from placing ourselves in relations which ordinarily excite a conflict between self-interest and integrity. It restrains all agents public and private; but the value of the prohibition is most felt, and its application is most frequent, in the private relations in which the vendor and purchaser may stand toward each other. The disability to purchase is a consequence of that relation between them which imposes on the one a duty to protect the interests of the other, from the faithful discharge of which duty his own personal interests may withdraw him. In this conflict of interests the law will interpose. It acts not on the possibility, that in some cases the sense of that duty may prevail over motives of self-interest, but it provides against the probability in many cases, and the danger in all cases, that the dictates of interest will exercise a predominant influence, and supersede that of duty. It therefore prohibits a party from purchasing on his own account that which his duty or trust requires him to sell on account of another; and from purchasing on account of another that which he sells on his own account. In effect he is not allowed to unite the two opposite chai’acters of buyer and seller, because his interest when he is the seller or buyer on his own account are directly conflicting with those of the person on whose account he buys or sells.”

It is true there are respectable authorities who lay down the rule less stringently and say, that “the rule is that a fiduciary is not permitted to buy the trust-estate or property except when there is the most entire good faith and a full disclosure of all facts and circumstances and an absence of all undue influence,, advantage or imposition.” See Krighler et al. v. Savage Manufacturing Co., 12 Md. 417; Buel v. Buckingham Co., 16 Iowa 294, Saltmarsh v. Beene, 4 Porter (Ala.) 283; Puzey v. Sencer et al., 9 Wis. 376; Faw v, Faw’s ex’r., 1 Hill’s Chy. 390; Coffer et ux. v. Ruffin’s ex’r., &c., 4 Coldw. (Tenn.) 509 ; Lovell v. Briggs, 5 N. H. 222. But those authorities which thus qualify the general rule all agree, that a purchase by a fiduciary of trust-property will always be scanned in a court of equity with the most searching and questioning suspicion, and will never be sustained, unless they fully appear to be in all respects fair, candid and reasonable; and the fiduciary must show that he took no advantage whatever of his situation ; that he gave to the other party all the information he possessed, or could obtain, upon the subject; that he advised him as he would have done in relation to a third person offering to become a purchaser; and that the price was fair and adequate; and the onus of proving all these things is upon the fiduciary who purchases the trust-property. But ^when we consider the abuses which may attend the purchasing of trust-property by a fiduciary, it does seem to me it is wiser for the law to prohibit such a purchase to the extent of holding, that it may be avoided at the instance of the cestui que trust, or person occupying his position, though it may have been made at a fair and adequate price, and the purchase may in all respects appear fair and reasonable, and the conduct of the purchaser just and candid; and the decided weight of authority is in favor of so regarding all purchases made by a fiduciary while he occupies a confidential relation ; and that all such purchases may be avoided at the pleasure of the cestui que trust. And such is the law as held in Virginia. See Moon v. Hilton et al., 12 Leigh 28; Buchler v. Laferty’s legatees, 2 Rob. (Va.) 299; Bailey v. Robinson, 1 Gratt. 9.

Some of the cases, which have been regarded as laying down the less stringent rule, are to be explained on the ground that the court considered that by a fair and clear agreement between Ihe trustee, or other fiduciary, and the cestui que trust, the trustee had ceased to occupy a fiduciary relation when he made the purchase; and these cases may be sustained on sound principles'; but others can not be so explained, but must be regarded as relaxations of the rule, which we think ought not to be allowed.

This rule is not confined to trustees and fiduciaries in the technical meaning of the words, but it extends to every person who is within the reason of the rule, that is, to every person who by his connection with another person, or who by being employed or concerned in his aflpirs, has acquired a knowledge of his property; and any such person occupying such confidential relation to anothei comes within the rule we have laid down. In other words, the rule embraces every relation in which there may arise a conflict between the duty which the purchaser owes the person with, whom he is dealing and his own individual interest. Thus the rule has been applied to trustees properly so called, as in Fox v. Macbreth, 2 Bro. C. C. 400, and Brothers v. Brothers, 7 Ird. Eq. 150; to guardians, as in Patton v. Thompson, 2 Jones, (N. C.) Eq., 285, and Scott et al., v. Freeland, 7 Smede & M. 417; to executors, as in Michond et al., v. Girod et al., 4 How. 503; to agents, as in Davone v. Fanning, 2 Johns. Chy. 252, and The York Building Co. v. Mackenzie, 8 Bro. P. C. 42; to directors of a corporation, as in Abbott v. American Hard Rubber Co., and Hodgkinson v. The National Live Stock Insurance Co., 26 Beav 473; to the cashier of a bank regarded as the agent of the bank, as in Forney v. The Bank of Orleans, 8 Paige 650; to an administrator, as in Martin v. Wyncoop et al., 12 Ind. 266, and Lovell v. Briggs et al., 2 N. H. 216; to a factor, as in Higer et al., v, Savage Manufacturing Co., 12 Md. 417; to an auctioneer, as in Oliver et al., v. Court et al., 8 Price 127; to commissioners of bankrupts, as in Ex parte Bennett, 10 Ves. 381; to assignees of bankrupts, as in Ex parte Lacey, 6 Ves. 627; to a sheriff, as in Carter &c., v. Harris, 4 Rand. 204; to solicitor’s of commissioners in bankruptcy, as in Owen v. Foulkes, 6 Ves. 630, note and Ex parte James, 8 Ves. 337; fo attorneys at law, as in Leisenning v. Black, 5 Wall. 303; and to parties bearing many other relations to each other which may not well be classified, as a creditor of a bankrupt who liad been consulted as to the mode of sales Hughes, ex parte, 6 Ves. 617; an agent employed by a trustee in managing a sale, as in Whitcomb v. Nunchin, 5 Mad. 91; a mortgagee with power of sale, as in Downes, v. Glagebrook, 3 Mer. 200; or an annuitant with such power as in Lewis v. Hillman, 3 Ho. Lo. 607, 630.

In some of the States the courts have hesitated about applying the strict rule we have stated to executors and administrators; and in some they have refused to apply it to the purchase by an executor or administrator, especially to the purchase of personal property. This refusal is based in part on the idea, that an administrator has at common law a right to appropriate the personal estate to himself by accounting for its appraised or actual value. See Lyon v. Lyon, 8 Ired. 201; Stollings et ux. v. Freeman, 2 Well’s Chy. 401, 409; McCarty et al. v. Calhoun et al., 17 Ala. 301, 303. Butin other States the strict rule we have laid down is applied to executors and administrators, as it is to other fiduciaries. In Virginia the Court of Appeals in Anderson & Starke v. Fox et al., 2 H. & M. 245, refused to apply the strict rule we have stated to an executor, who bought personal property át a public sale, apparently on the ground that the practice was so common in Virginia,“that to so hold would operate to render voidable the title to a great amount of personal property. Chancellor Taylor of the superior court of chancery of the Richmond Districfin McKey executor of Faqua v. Young, 4 H. & M. 430, held that a purchase by an executor of land at a public sale made by himself was not voidable, when the sale was fair and correct. But this decision has been “overruled by the Virginia Court of Appeals in Moon v. Hilton, 12 Leigh 2-28, and Bailey’s adm’r v. Robinson, 1 Graft. 4-9; and in Michond et al v. Girod et al., 4 How. 557, the Supreme Court of the United States decided, that no distinction could properly be made between executors and administrators and other fiduciaries, and the strict rule should be applied to them also, and that anjr purchase by them of themselves must be held voidable at the option of those interested in the estate.

In England the courts have gone further in avoiding purchases made by solicitors and attorneys at law of their clients, than they have of purchases made by other fiduciaries, and have permitted such purchases to be avoided when there was any evidence tending to show that there was inadequacy of consideration or otheC ad vantage obtained by dhe attorney or solicitor, when such1 sale would hardly have been disturbed, had the fiduciary relation been of any "other character, as when the relation of client or attorney would hardly be regarded as embracing in any manner the property purchased, and when there had been a great lapse of time before the sale was to be avoided. All contracts between attorneys and solicitors and their clients are viewed with great jealousy and suspicion by the English courts. See Gresley v. Mousley, 64 Eng. Chy. R. (3 De G. F. & J.) 433; Austin v. Chambers et al., 6 Cl. & Fin. 1; Savory v. King, 5 Cl. & Fin. 626; Holman v. Joynes, 53 Eng. Chy. R. (4 De G. M. & G.) 270.

It is probable that the English courts have been more jealous and suspicious of all dealings between solicitors or attorneys at law and their clients than the courts of this country would be, as the relation generally between attorneys and clients in England is more peimanentand covers more ground than this relation generally does in this country. But upon one point the English and all the American writers I have seen are agreed, that an attorney at law cannot purchase property, real or personal, at a judicial sale, whether made by a commissioner of the court or by a sheriff, after a judgment has been obtained 'and an execution issued, when his client might sustain an injury by his being a purchaser. See Sidney v. Ranger, 35 Eng. Chy. Rep. (12 Sim.) side page 718, top page 101 ; Leisenning v. Black, 5 Watts 303; Howell v. Baker, 4 Johns. Chy. 118; Wade v. Pettibone, 11 Ohio (Stanton) 57; Stockton v. Ford, 11 How. 247.

In most of these cases the application of the general principle, that an attorney cannot purchase property when his being the purchaser might prejudice his client’s rights, have arisen when he purchased the property of the defendant on an execution issued by him for his client.. The rule well established in such cases being, that he cannot at a sale under an execution, "whether of real or personal property, without the express consent of his client purchase, unless he pays for the property a a sum sufficient to pay off his client’s whole debt, or if he has more than one client entitled to be paid out of the property sold, unless he pays for it a sum sufficient to pay off all his clients’ debts, so as to render it certain that they can not suffer by his being a purchaser; and if he does not pay a sum sufficient to pay off all his clients’ debts, the sale will be set aside at the instance of any client, though it may have been ever so fair, and an adequate price may have been paid for the property.

The ground of these decisions is thus stated by Kennedy, judge, in Leisenning. v. Black, 5 Watts 304. He says: “The attorney in such case being employed by his clients to collect the amount of the judgment and do the best he can for them in this respect, it is altogether incompatible with those motives of action which ought to govern him, and which alone are suited to secure a faithful discharge of the trust, to permit him to become the pui chaser of the property sold under the execution for his own benefit, unless it be for a sum sufficient to cover the whole of his clients’ demand. To permit him to buy for his own use at a less sum, without the consent of his clients, would be enabling him to make a gain or profit by sacrificing their interest; because the lower the price, for which he should purchase the property, the greater the advantage in so doing. Such a principle therefore is not to be tolerated. This rule arises from the nature of the relation between the parties, and is alike applicable, however honest and fair the purchase may be; and it is not necessary to enquire whether the purchase is an advantageous one or not, because the fact may be so, and yet not susceptible of being distinctly and clearly proven at the time, or there may be even fraud in it, and the party against whom it has been committed not able to prove it. The rule therefore is founded in principles of public policy; and with a view to protect the interest of those for whom he has undertaken to act, all temptation to do any thing in opposition thereto is removed. There is perhaps no relation in which the confidence is greater than that between attorney and client, and in which the influence over the mind and interest is greater than that possessed by an attorney over bis client. The most implicit [confidence is reposed in the integrity, skill and discretion of the raer, and that all these will be exerted to the uttermost of his ability, so far as may be necessary, to accomplish the end for which he is retained. And though the sheriff is the agent of the law in making sale of property taken in execution, and in doing so may be very properly* considered as acting under the authority thereof, yet the attorney of the party, at whose suit the property is about to be sold, has a control in regard to it, that may in many instances be exercised either to the advantage or prejudice of his clients as he pleases. It. may be advisable for instance, on the part of the attorney, after the property has been advertised for sale, or after it has been exposed to sale, for some good reason to postpone or countermand the sale, in order to obtain a better price and make the amount of his client’s claim by offering it for sale at a future time; or he seeing at the time first appointed for the sale that the property was likely to be sold for a price greatly below its real value and the amount of his client’s debt, might, instead of countermanding it, urge the sheriff to go on and make the sale and he become the buyer himself for his own use.”

Like reasons are given for holding the same way in Wade v. Pettibone, 11 Ohio. 60. Explaining the rule we have before stated, the court says. “It is universally applicable to trustees, executors, agents; and it is nowhere of more forcible application, than to an attorney purchasing under an execution, when the whole debt is not paid.”

In the case of Stockton v. Ford, 11 How. 232, 247, the circumstances were changed, but the same principles of law applied. There, after the judgment had been recovered by the plaintiff, he was sued by a third party, who got a judgment against him and sued out an execution and sold this first judgment; and it was held that without the consent of the client in this first judgment his attorney in the suit m which it was recovered could not purchase this judgment at the sheriff’s sale under the execution. Justice Nelson in delivering the opinion of the court says : “It is true this is not the case of an attorney purchasing property under an execution which he has issued on a judgment, the usual case in which a court of equity has interfered and declared the purchase to have been made in trust for his client; but the principle is the same. He had charge of the judgment, and was intrusted with the management of it for the purpose of collection ; and can be allowed to do no act in the absence of the client, by which he may derive an advantage at the expense of the client. Instead of the judgment suppose the plaintiff had charge and management of a plantation and slaves for his client, and an execution should come against them undgr which they were seized and sold; c>m it be doubted, if purchased by the attorney in the absence 'of the client and without his»consent, that he could not hold the property discharged of the trust growing out of the relation existing between the parties ? We suppose not. A court of equity from the mere fact of such relation would fasten on the purchase a trust, without any enquiry into the motives or intentions of the attorney in making the purchase, and compel him to give up its benefits and advantages on the reimbursement of the purchase-money. Heither fraud nor imposition need be shown. The client may at his election treat the act as done for his benefit. There are few of the business relations of life involving a higher trust and confidence than that of an attorney and client, or generally speaking one more honorably and faithfully discharged; few more anxiously guarded by the law, or governed by sterner principles of morality and justice; and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and industrious to see that confidence thus reposed shall not be used to the detriment or prejudice of the rights of the party bestowing it.” In Moon et al. v. Brochen, 27 Ill. 23, it was decided when the attorney of a party becomes the purchaser at a forced sale, he stands in the shoes of his client, and though the attorney designed to purchase for his own benefit, the client may claim the purchase for himself. It has been indeed seriously questioned' whether an attorney can purchase at a sheriff’s sale property, even if he give for it the full. amount of his client’s debt, so that his client could not possibly be injured by the purchase; for the defendant in the execution ought perhaps to be protected from the injury which might result to him from the plaintiffs’ attorney, who has the control of the execution and under whose instructions the sheriff generally acts. It has been said : “It is dangerous to allow a person, who has such a material agency in the sale, the capacity of buying on his own account.” See Howell v. Baker, 4 Johns. Chy. 120. In Hall v. Halleck, 1 Cox 134, Lord Thur-low observed, that “no attorney can be permitted to buy anything in a course of litigation, of which litigation he has the management. This the policy of justice will not endure.” But perhaps it may be going too far to say that an attorney in a suit can buy no property sold in the suit, though in so doing his client could not possibly be injured. But the authorities we have cited justify beyond question the doctrine, that if a client’s property real or personal is sold in the process of a suit, his attorney cannot be permitted to purchase it without the express consent of the client.

The general rule we have laid down, that a fiduciary will not be permitted to buy the trust-property- even when the purchase is fair and the price adequate, and that the cestui que trust or person bearing a similar relation may at his option set aside such a sale, applies as strongly to a public sale by a fiduciary as to a private sale, nor will the fact, that thq sale is made under an adverse proceeding and at a judicial sale, make any difference. He can with no more propriety purchase at such a sale than at one made by himself. Elliott v. Poole, 3 Jones Eq. 17; Jameson v. Glasscock, 29 Mo. 191; Martin v. Wyncoop, 12 Ind. 206; Hoitt v. Webb et ux., 36 N. H. (5 Fogg) 158; Jewett v. Miller, 10 N. Y. 402; Chandler v. Moulton, 33 Vt. 245. The reason of this is obvious; for if the purchaser bears such a relation to the persons interested in the property to be sold as to impose on him the duty of making the property bring the highest price possible, this duty is as incumbent on him when the property is sold under an order of the court or by any other person or at any other sale, as it is when made by himself either privately or publicly; and therefore he cannot- be permitted to put himself in a position in which it is his interest that the property should bring the feast sum possible.

In the application of the principle we have laid down it makes no difference, whether the fiduciary stands alone or is one oí many who occupy the same fiduciary relation. Each fiduciary has no more right to purchase from his co-fiduciaries, than he would have to purchase from himself i-f he alone occupied the position. See Aberdeen Railway Co. v. Blakey, 1 Macq. H. L. Cas. 461, 473; The Cumberland Coal Co. v. Sherman, 30 Barb. 553; The Hoffman Steam Coal Co. of Alleghany County v. The Cumberland Coal and Iron Co., 16 Md. 456; Holcomb v. Holcomb, 3 Stock. (N. J.) 231. The rule we have laid down extends not only to the fiduciary but also to his agent to sell, because it is his duty to act as the fiduciary himseli is bound to act. See Cumberland Coal Co. v. Sherman, 30 Barb. 553; Rennick v. Butterfield, 31 N. H. 90; Banks v. Judah, 8 Conn. 157; Copeland v. Mercantile Insurance Co., 6 Pick. 204.

In all cases, where the rule we have laid down applies, the purchase by the fiduciary is not absolutely void but only voidable by the cestuis que trust or person occupying a similar position. The rule was adopted for their benefit, not for that of the fiduciary or of other persons ; and only they can have the benefit of it by avoiding the purchase made by the fiduciary at their option, but if there are several occupying the position of cestuis que trust, one may have the sale vitiated, though the others are content with it; Davoue v. Farming, 2 Johns. Chy. 252, 268; Thorp v. McCullum, 1 Gilman (Ill.) 627; Baldwin v. Allison, 4 Minn. 30.

The principles we have laid down apply not only to every description of fiduciary, but they are broad enough to include any one, who obtains a knowledge of one’s affairs while acting in a subordinate capacity under a person who occupies a fiduciary relation to him; thus a clerk of an attorney at law bought of the client a bond, which had been left with the attorney for collection under circumstances which, while suspicious, might not have vitiated the sale but for the confidential relation between the parties; and the sale ivas on that account set aside. See Poellon v. Martin, 1 Sandf. 569. And the clerk of a broker employed to sell lands, and who had access to the correspondence between the vendor and the broker, has no more right to become a purchaser of the land than the broker would have. Garden v. Ogden et al., 22 N. Y. 327.

The principles we have stated apply to all persons holding confidential relations of any description in all their strictness and force, only when the purchase is made by the fiduciary while the confidential relation between him and the vendor is still in existence. The rule of law, which prevails when the purchase is made after the confidential relation has ceased to exist, is thus stated by Lord Eldon in Ex parte Lacey, 6 Ves. 626. He says: “Although a trustee, who is intrusted to sell or manage for others, undertakes, at the same mordent in which he becomes a trustee, not to manage for the benefit and advantage oi himself, it does not preclude a new contract with those who have intrusted him. ' It does not preclude him from bargaining that he will no longer act as trustee. The cestui que trust may, by a new contract, dismiss him from that character, but even then that transaction, by which they dismiss him, must according to rules of the court be watched with infinite mosfi guarded jealousy; and for this reason : the law supposes him to have acquired all the knowledge a trustee may acquire, which may be very useful to him, but the communication of which to the cestui que trust the court can never be sure he has made when entering into the new contract by which he is discharged.” And in Coles v. Trothick, 9 Ves. 234, Lord Eldon again lays down the law substantially the same, though in different language. He says: “A trustee may buy from a cestui que trust, provided there is a distinct and clear contract, ascertained to be such after a jealous and scrupulous examination of all the circumstances, that the cestui que ¿rust intended that the trustee should buy, and there is no fraud, no concealment, no advantage taken by the trustee or information acquired by him in the character of trustee. I admit it a difficult caseto make out whenever it is contended that the exception prevails.”

The law I take to be, that if the trustee proves clearly that he gave to the cestui que trust all the information about the property and its value which he possessed, and with the consent of the cestui que trust ceased to be a trustee, and deals directly with the cestui que trust without taking any sort of advantage of him, and gives him an-adequate price for the property, such a purchase cannot be set aside by the cestui que trust, provided the transaction is proven to the entire satisfaction of the court to have been of this character after a jealous and scrupulous examination of all the circumstances.

If a fiduciary of any sort, in violation of the rule we have laid down, purchases from the cestui que trust the trust-property, and then re-sells it to a bona fide purchaser without notice, before the cestui que trust applies to the court to set aside the purchase by the trustee of the'trust-property, the original sale made to the fiduciary cannot be set aside; and the only remedy then left the cestui que trust is to demand of the fiduciary personally an account of the pi’ofit he made by the re-sale, and the court will require him to pay over such profit, if he made any. But if the purchaser from the fiduciary has notice or knowledge of the facts which vitiate the purchase by the fidu-eiary, the court will set aside the sale, though the purchaser from the fiduciary paid full value. See The Hoffman Steam Coal Company of Alleghany County v. The Cumberland Coal and Iron Company, 16 Md. 456; Langams et. al. v. Boyson, 8 Binn. (Pa.) 58; Bobbins v. Bates, 4 Cush. (Mass.) 104; Jackson v. Walsh, 14 Johns. 407; Hawley v. Cramer, 4 Cow. (N. Y.) 748; Ward v. Smith et al., 3 Sandf. (N. Y.) side page 592, toppagé 645. And even when the property remains in the hands of the fiduciary who has purchased it, the cestui que trust must institute his suit in equity in a reasonable time, asking the court to set aside the sale, or the sale will not be set aside.

We will now apply the law as we have stated it to the facts presented by the record before us. Donally’s administrator made a deed on January 12, 1865, to Buchanan and West conveying three thousand five hundred and sixty-six and two thirds acres of land in Kanawha county, West Virginia. The conveyance, though nominally to them in fee simple, was really in trust for themselves and a large number of others who together paid the purchase-money; and they subsequently let in a large number of others as equal partners in the transaction. The owners of this land formed themselves into a corporation under the laws of Ohio, where a large portion of them resided, to bore for oil. They tried the experiment, and it was a failure, no oil being found; and in less than a year they formally dissolved the corporation, and authorized Buchanan and West, the trustees, to sell this land, limiting them in the price to be taken to $15.00 per acre. This was done January 1, 1866.. Buchanan and West purchased this tract-of.land for themselves aud the other owners,-a'n'd were the sole man.-" agers of it from the beginning,’superinionding the efforts to discover oil, paying the taxes, and in all respects managing the property for the other owners. They had. ‘ 110 knowledge of it, except to the extent that informa-tioo was furnished them by the trustees and agents, Buchanan and West; and they furnished to them but little information. Everything relating to the property was entrusted to them ; and no supervision of them was taken by the other owners. While this agency was in full operation, between March 23, 1866, and September 11, 1870, these trustees and agents severally purchased of the other owners severally -twenty-two fifty-sixths of this tract of land, they say. They produce no evidence except simply their own statements of their having made these purchases; and they simply say they bought their several interests for one tenth of the price the owners had paid, and state none of the circumstances under which they purchased.

They come obviously within the rule we have laid down ; and all of these sales to them may at the mere option of the several parties they purchased from be set aside, unless a case is made out utterly different from what now appears. Indeed it would seem almost impossible with the facts admitted in the record before us for the trustees to prove anjr facts that could prevent these owners of the land severally from setting aside the sale of their shares to them, if they desire so to do. Pour of them, plaintiffs in this suit, express the desire to set these sales aside. Hone of the other eighteen owners who so sold out their shares have been heard from, none of them having been made parties to any of these suits or proceedings, and all of them being non-residents, and most of them probably ignorant of the pendency of the suit-

Brooks, in his original bill, filed April 1, 1871, calls upon Buchanan and West, the trustees, “to disclose the names and interest of all the owners of said land; that they disploge^how many interests and shares they have acquired from their cesitttS que trust, and at what price;” and they ask “that the interest of all the owners in said land be established by the court.” ' In their answers Buchanan and West admit fully their fiduciary relation to all the owners of said land, including those of whom they claim to have purchased ; but they do not give the owners, whose shares they say they purchased while acting as agents and trustees, or the price they paid for their shares. They simply say they acquired twenty-two fifty-sixths of this tract of land “by purchase from the several owners thereof for a consideration satisfactory to said owners, and in which transaction the plaintiff Brooks has no interest or 00000™.” And though they make their answer a cross bill, they do not make defendants of any of the eighteen owners of this tract of land, whose interest they claim to have purchased ; nor do they file any evidence of their several purchases.

It is clear that these eighteen persons or their heirs and devisees, if any of them be dead, were necessary parties to both the original suits by Brooks and this cross-suit by Buchanan and West, both of which asked a sale of this tract of land by the court. It is true, that on the principles of law we have laid down, Brooks had no right to ask to have these purchases by Buchanan and West of other owners of this tract of land set aside ; but the answers and depositions of Buchanan and West having disclosed to the court clearly that there were eighteen parties who were original part owners of this tract of land, and there being no deeds from them produced, and no assignments or transfers of their several interests, it was clearly the duty of the court, before declaring that Buchanan and West severally owned all the interests of these eighteen parties and ordering a sale of the tract of land, to require that these eighteen parties, their heirs or devi-sees, should be made defendants to both Brooks’s original bill and Buchanan and West’s cross-bill.

When the decree of sale of this land was entered, November 15, 1871, the record clearly showed that all the claim that Buchanan and West set up to be the owners of these twenty-two fifty-sixths of this land, purchased as they said from these eighteen owners, was that while they were acting as trustees and agents for them, they had bought these shares from them at one tenth of what 'the shares cost them. This gave' full notice to any purchaser of this tract of land under this decree, that to the extent of twenty-two fifty-sixths of this land these eighteen persons had a right to have these sales severally to these trustees severally set aside, if they chose. And purchasing with this full notice of this equity of these eighteen persons who were not parties to the suits, the purchaser under this decree could have got no title to twenty-two fifty-sixths of this land as against these eighteen parties, had they afterwards asked to have their sales to the trustees nominally set aside. The purchaser could of course only acquire such title as the parties to the suits owned; and having notice by the record that there was an equitable title to twenty-two fifty-sixths of this land in these eighteen persons not parties to the suits, if they chose to claim their shares, the purchaser must have taken the land subject to this equitable claim of these eighteen persons. The authorities we have cited clearly sustain this as law. Brooks and one of the counsel of Buchanan and West, who actually purchased this land under the decree in these suits, must clearly be held to have actual notice of the facts which gave the eighteen parties an equitable claim on this tract of land; and by the sale and deeds made them they certainly got a very precarious and unsatisfactory title to the twenty-two fifty-sixths of this land, dependent as it is apparently on the will and pleasure of these eighteen persons to render it worthless; and indeed any one of them has to the extent of his share the power to destroy the interest of these puichasers in this land. The authorities we have cited make this clear.

Nor does section 8 of ch. 132 of the Code of West Virginia render the title of the purchaser, Brooks, any better. It simply provides that the setting aside or the reversal of the decree of sale shall not affect the title of the purchaser after the sale is confirmed. But the title of the purchaser. Brooks* in this case is defective and practically valueless as to twenty-two fifty-sixths of this land, though the decrees of sale were never set aside or reversed. For this decree oí sale, like any other decree, is totally inoperative on the rights of persons who were not parties to the suits in which the decree was rendered, if those rights had been a legal title to any part of the land; and when, as in this case, it is an equitable one, the decree is also totally inoperative for the protection of a purchaser having at the time of his purchase full notice of their equitable rights. The provision in our Code, referred to and relied on by the purchaser as making his title good, cannot possibly have any effect in transfer-ing in any case to the purchaser the title of persons who are not parties to the suit. These rights must remain entirely unaffected by this provision in our Code. The court therefore made.an obvious mistake in determining that Buchanan and West owned these twenty-two fifty-sixths of this land, and in rendering a decree for the sale of this tract of land before these eighteen persons were made parties to these suits. The decree of sale, it is true, is not a nullity, but under it a purchaser, and especially a party to the suit, could get a good and safe title to only thirty-four fifty-sixths of this land, and it should therefore not have been rendered.

The principal question in this case will now be considered, that is: Ought the decree of October 31, 1872, confirming the sale by the commissioners to Brooks, be set aside in this suit as fraudulently or improperly procured from the court? The allegation in the bill m this suit is, that Brooks knowing that the owners of this tract of land were all non-residents brought his suit with the assent and approbation of the trustees, Buchanan and West, and for the sole purpose of obtaining a decree to sell the land, and to purchase it at a great sacrifice, and thus to defraud the other owners out of their land ; and that Buchanan and West gave their concurrent assent to this fraudulent scheme of Brooks, as by the suit they would get their fraudulent purchases of these twenty-two scares of this land approved, and 'their interest would ^118 be greatly promoted, even if the land was-sacrificed, as they would in the absence of the parties interested get nearly half of the proceeds of the sale; and that as it was, though the land was sacrificed, yet they by their speculation in buying these shares fraudulently at one tenth of their value, actually realized a profit of nearly eight thousand dollars.

This charge, that Brooks with the concurrence of the trustees brought this suit for the sole purpose of buying this tract of land at a great sacrifice, and that the consideration moving the trustees to assent to this fraudulent scheme was, that they might quietly get their speculation in buying fraudulently these twenty shares for almost nothing affirmed, is entirely unsustained by any evidence. There is nothing in the record to show that Brooks did not bring his suit in good faith, and with the legitimate purpose of having his interest in this tract of land recognized and established by a decree of the court, and the land sold that he might realize his interest; or that there was any improper understanding or agreement between him and the trustees, or indeed any agreement or understanding of any description between them, when the suit was instituted. On the contrary the bill on its very face shows that there could not have been such an understanding as is charged between these parties.

This bill makes charges of improper and fraudulent conduct on the part of the trustees, and among other things seeks to hold them to an account for the funds which had come into their hands as trustees. It also calls upon them to disclose how many interests and shares they had purchased from their cestuis que trust and at what price, and asks that the interest of the true owners of this land might be established by a decree of the court. Had the trustees in obedience Oto thin demand given the names of the parties of whom they had purchased, and had the interest of the true owners been established by the court as the bill prayed, Buchanan and West would in all probability have lost their entire speculation in the purchase of these twenty-two shares their cestuis que trust. It is thus obvious on the very face of Brooks’s bill, that he neither then had nor expected to have the concurrence of these trustees in his buying in this tract of land at a great sacrifice in consideration of his letting them quietly make their speculation out of these eighteen, non-residents. Nor is there any evidence of any subsequent arrangements of this character between them. On the contrary it is clear, that when this tract of land was first advertised by the commissioners for sale-on the 18th of May 1872, there was no concert of action between Brooks and said trustees with reference to the purchase of said tract of land at the sale. On the contrary, within a week of the time they expected this tract of land to be sold, we find these trustees and Brooks each severally, and without the knowledge of the others, making arrangements each for themselves to buy in this land, the other by such arrangements being excluded from any participation in the purchase.

A little more than a week before this sale was to take place Harris, representing himself and seven other part-owners of this tract of land, goés to Charleston, Kanawha county, West Virginia, to urge upon the commissioners to postpone the sale of this land, -it being in their judgment liable to be sacrificed if sold at the appointed time. The commissioners refused to postpone the sale, they doubtlessly thinking that the land would then bring a fair price. We have a right to assume that the trustees as well as Brooks were informed of this refusal, as the commissioners were of the counsel for the trustees and of Brooks, one of them being of the counsel for each ofthese parties. Accordingly we find each of them acting as though he expected the sale to take place at the appointed time, May 18, 1872. And we find the trustees, being advised by their counsel, Ferguson, in Cincinnati, that being trustees and confidential agents of the other owners of this tract of land, they could not legally purchase this tract of laud for themselves at the public sale then expected to be made in about a week, undertook under the advice of their counsel to get a third party, Schiff, to attend the sale and with funds furnished by the trustees to buy the land for them, their agent, Schiff, to have an interest in the speculation lor his share in the transaction.

The counsel of Buchanan and West, Ferguson, was unquestionably right in advising them that their duty as trustees and agents for the sale of this land precluded them from being purchasers of it at this sale to be made by'the commissioners. For, as we have seen, they had no more right to become the purchasers at this public judicial sale, than they would have had to purchase it at public sale made by themselves. In either case their confidential relations to the other owners of this tract of land, made it their duty to use every effort to make this land bring the highest possible price; and therefore the law would not permit them to put themselves in a situation which would make it their private interest to violate their duty and cause the land to sell at the lowest possible price. There were but two ways by which they could have become purchasers of this land; one by getting in advance the leave of the court to become bidders at this sala, if the court thought it proper to give them such leave in this particular case, and the other in t- e words of Lord Eldon : “By bargaining with the eestuis que trust that they would no longer act as trustees. The’ eestuis que trust must by a new contract have dismissed them from that character.” And the evidence required to sustain a contract that these trustees might buy, must be very clear. According to Lord Eldon : “it must be ascertained too that there was no fraud, no concealment, no advantage taken by the trustees of information acquired in that character, and all this must be ascertained after a jealous and scrupulous examination of the circumstances. and the whole transaction must be watched with infinite and most guarded jealousy.”

There is not in this case even any pretence that leave to become bidders at the sale was given by the court, nor is there one particle of evidence of such a contract or understanding with the oestuis que trust. The only possible pretext for inferring such an understanding is the filing of the bill by Brooks and the cross-bill by the trustees asking a sale of the land by the court. If the writs in these suits had been actually served on all the cestui que trust, it could not possibly have had the effect of a contract dismissing these trustees from that character and agreeing by the cestuis que trust that they might be bidders at the sale; for, as the authorities we have cited show, it would have still been their duty to use their best efforts to procure the highest price for this land, though it was sold by commissioners of the court. But the summonses in these suits were not served on any of the ces-tuis que trust; and a majority of them knew nothing of the character of the suits, while a number had never heard of their institution. So far as they knew, the trustees were still acting as their agents to sell this tract of land privately, in pursuance of the authority conferred on them by their resolution of January 1, 1866. And as they had been advised by counsel that they could not, without a breach of good faith, become the purchasers of this land at this sale, their effort to get a third person to buy the land in his own name can only be regarded as an attempt to commit a gross and positive fraud on their part. This third party did not accept this proposal of theirs at the time it was made, but took it under advisement and ultimately declined to act in the matter, advising that some other person be substituted for him.

While Schiff had this proposition under advisement, Smith, one of the counsel for these trustees, and Brooks were entering into a contract to buy this land jointly at this sale, an arrangement as illegal as that which the trustees were then endeavoring to make. Brooks stood in no confidential relation to any of the owners of this land, and he had therefore a perfect right to be a bidder at thissale by the commissioners, and, if he chose, to buy this tract of land. This agreement is dated May 14, 1872, only four days before it was expected that the land would be sold. Itis obvious on the face of this agreement that Smith, one of the counsel of the trustees, and Brooks had neither of them heard of the injunction to stop this sale which Harris had obtained three days'before, on May 11, 1872. The contract between Brooks and his brother-in-law, Smith, was doubtless entered into at Cincinnati, where Brooks was confined to his home thereby sickness; and as it stipulates that the land should be bought for thejoint use of Brooks and Smith at the sale stated by the contract to be made on the 18th of May, it is obvious that they had not then heard of this injunction which had been granted a few days before in West Virginia. It is equally obvious that this contract between Brooks and Smith, the counsel of the trustees, for the purchase of this land was made without the knowledge or consent of these trustees, for they too were then engaged in endeavoring to make a private arrangement, whereby the land was to be bought for their own benefit. Smith, without the consent of his clients, certainly had no right to become the purchaser of this land, and of course no right to enter into this contract with Brooks to purchase it jointly with him. The authorities we have cited show that the law forbids him to buy this land, though sold at a judicial sale, without the consent of his clients.

In the language of Kennedy, judge, in delivering the opinion of the court in Leisenning v. Black, 5 Watts. 304, slightly modified, “to permit him, without the consent of his clients, to become the purchaser of the property is altogether incompatible with those motives of action which ought to govern him and which alone are suited to secure a faithful discharge of his trust. To permit him to buy for his own use, without consent of his clients, would be enabling him to make a gain or profit by sacrificing their interests; because the lower the price, for which he should purchase the property, the greater his advantage in doing so. Such a principle is therefore not to be tolerated. This prohibition oí his purchasing for his ov'n use arises from the nature of the relation between the parties, and is applicable, however honest and fair the purchase may be. It is not necessary to en-quire whether the purchase is an advantageous one or not; because the fact may be so, and yet not be susceptible of being distinctly and clearly proven at the time; and there may be even fraud in it, and the party against whom it has been committed be unable to prove it. The rule therefore is founded in principles of public policy and with a view to protect the interest of those for whom the party has undertaken to act, and therefore all temptation to do anything in opposition thereto is removed. The most implicit confidence is reposed in the integrity, skill and discretion of the attorney, and that all these will be exerted to the utmost of his ability, so far as may be necessary, to accomplish the end for which he is retained. And although the commissioners are the agents of the court in making the sale, yet the attorney of the parties, at whose suit the property is to be sold, has a control in regard to it, that may in many instances be exercised either to the advantage or prejudice of his clients, as he pleases. It may be advisable for instance, on the part of the attorney, after the property has been advertised for sale, for some good reason to postpone the sale, in order to obtain a better price by offering it for sale at a particular time ; or he seeing at the time it is offered for sale, that the property was likely to be sold for a price greatly below its real value, might instead of countermanding' it urge the commissioners to go on and make the sale, and he become the buyer for his own use.”

Is it possible to know that what is here surmised by Judge Kennedy did not actually occur? Might not .Smith have urged the commissionei’s of sale, one of them his partner, to go on and make this sale and not postpone it, as certain of the parties in interest urged should be done ? Might not this have been done with a view to his purchasing it at a very low price? It is true there is no evidence of this sort in this case ; yet the first may be so, as Judge Kennedy well says, and yet not be susceptible of being proven. Had he so urged, his advice would naturally have had great influence with his partner, one of the commissioners for sale, for he would take it for granted that the advice was given to promote his client’s interest and to get the best price possible for the land. It is true, that when the commissioners refused to postpone' this sale, he had made no contract to purchase. But who can say he did not contemplate making such contract ? It was made in four days afterwards.

When the land was subsequently decreed to be sold, the court directed it to be advertised only in a county newspaper instead of as before in a city newspaper. Of course this change was made at the suggestion of some counsel; and whose advice would the court be more likely to regard ? The advice of Smith, the counsel for the trustees, whose duty it was to obtain the largest possible price for the land, and who had a much larger personal interest in the property bringing a high price than any other party in the suits. If he advis.ed or suggested that it was unnecessary and a useless waste of money to advertise the land in a city paper, the court, supposing he had his client’s interest at heart and knew best what would promote that interest, would naturally adopt his suggestion; and yet this counsel, Smith, had, without the knowledge of the. court, put himself in the qrosition to make his own personal interest and that of his client conflict. Can this be tolerated by a' court of justice ? It is true, that there is no evidence that Smith used his influence to get the court to modify the decree of sale so that the land would not be advertised in a city newspaper; but if he did so use his influence, the record of course would not show it. The judge himself could not in one case in a hundred remember at the next court under what or whose advice such a modification in a decree was made. Though no fraud is proven •in this case, still it illustrates well the propriety of the rule of law, which we have seen the courts have adopted, of prohibiting as a matter of public policy an attorney from purchasing property ac a judicial sale in which his client is interested without his client’s consent, whenever the purchase by him could possibly injuriously añect his client’s interest. And the circumstances of this case tend strongly to countenance the propriety of the more stringent rule, which we have seen some of the courts countenance, which forbids an attorney to purchase at any judicial sale, though his client can not be prejudiced, or though done with his express consent, because even then such permission to a purchaser might tend to the injury of other parties to the suit and might induce the attorney to act oppressively and unjustly to them and deceitfully and unfaithfully to the court or its officers.

'Whatever may be regarded as the proper rule to adopt with reference to permitting an attorney with the consent of his client to bid generally at a judicial sale, it seems to me obvious that in the present case the attorney for the trustees, Buchanan and West, ought not to be permitted to so bid, even had they expressly given their assent. If Buchanan and West had given their assent to their counsel, Smith, to enter into this contract with his brother-in-law, Brooks, to purchase this property at the public sale by the commissioners, they would have violated their duty to their cestuis que trust as clearly as they would have done by purchasing the property themselves. It was then their duty to their cestuis que trust to use their best efforts to procure the best possible price for this property, which had been confided to their care with full authority to sell or otherwise manage. The trust imposed on them would have been obviously violated if they had given their consent that their attor-ney> wbo fi’om his position necessarily had so much contr°l over the sale °f this property, should himself become a purchaser. JBy so doing, they would have authorized their attorney to put himself in a position wherein it became his personal interest that the property should be sacrificed. Their permitting their counsel to take such a position would probably tend more to the injury of the interest of their cestuis que trust, which they were bound to protect, than if they had themselves become bidders for this property^ because from the position of their counsel, Smith, he could if so disposed do more injury to the eestuis que trust in this sale by the commissioners, than the trustees themselves could probably have done by being bidders. Smith therefore could not in this case, even with the assent of his clients, have properly made this contract with his brother-in-law, Brooks. Much less could he properly have done so without their consent or knowledge, as he did. And Brooks knowing that his brother was the counsel for these trustees, could not properly enter into such a contract with him, though he had himself a right to purchase the property. He had no right to put the counsel of other parties in a position in which he might be tempted to betray their interest to promote his own.

Smith in his answer says: “He fails to see any impropriety in bidding at a judicial sale and thus advancing the price of articles which a client is interested should bring the highest possible price.” The impropriety consists in putting himself in a position, in which it becomes his personal interest that the property should bring the lowest possible price. If attorneys so act, they deliberately put themselves in a position, in which their duty and their interest come into direct conflict; and the law will not on principles of public policy tolerate this, as attorneys may be thus tempted to violate their duty ; and if they did, and so wronged their clients, it would be very difficult, if not impossible, to establish the wrong done by proof.

The conduct of the commissioners, Quarrier and Knight', is assailed in the bill. There is nothing in record which shows any impropriety of conduct on then; part.. There was no impropriety in the court’s appointing them special commissioners to sell this tract of land, or in their accepting the appointment and acting in that capacity. Their clients had a larger interest that this.tract of land should sell for the highest possible price than any other parties to the suit. It is usual for the courts in this state to appoint the attorneys of parties, whose interest it is to get the highest price for the land, the commissioners to sell it; and we see no reason why this practice on the part of our courts should be changed. The commissioners when so appointed have as it were a double motive to the just and full performance of their duty. Their own individual interest accords with the interest of their client; and both are promoted by the sale of the property at the highest possible price.

These commissioners were suspected by some of the plaintiffs in this suit of being actuated by improper motives in refusing to postpone the first sale on the application of Harris. But there was no ground for such suspicion. The property had been extensively advertised at a cost of $165.00. They had no motive, either as counsel or as commissioners, to have any other desire than that the property should bring the highest possible price. They had no knowledge of any combination or arrangements by any one which would have tended to depreciate the price at which the property would probably sell; and in fact the combinations and arrangements made by the trustees and by Brooks and Smith, which had this evident tendency, had not then been made; and they no doubt exercised their best judgment, when they refused to postpone this sale. 'They may perhaps have been influenced by the advice of Smith, but of this there is no evidence ; and perhaps Smith contemplated then buying the property, as a few days thereafter he entered into an agreement with Brooks to do so ; but if this beso, and they were in point of fact so influenced, 'no blame could be attached to these commissioners. Smith was counsel for parties who the court had decided were entitled to more than forty-six per cent of the proceeds of the sale; and the commissioner might well have relied on his judgment on the question whether the property ought to be then sold; and certainly they had no right to suppose that his advice, if he gave any, urging the sale could be biased by any self-interest in conflict with the obvious interest of his clients. The conduct of these commissioners at the sale that was actually made was all that could be reasonably expected of any commissioners.

It is true that the property was knocked down at a price not over half its estimated value,taking the opinion of the witnesses who were examined as our guide as to what was its then value; but these commissioners had no detailed or special knowledge of the value of this tract of land, the price at which they knocked it down, $21,500.00, was within $4,500.00 of the price which shrewd business men residing in the county, and probably well aquainted with its value, had sold the land for on the 12th of January, 1865, at a time when the price of property of that character was high. A. Donnally, administrator, had sold it at that time for $26,000.00. It is true that very shortly thereafter a large part of it had been sold at the rate of $50,000.00; but this sale was to a large number of parties, none of whom paid over $2,000.00 of the purchase-money, and who bought it believing that it would yield large quantities of oil, and this was the sole inducement for paying this price. The experiment had been fair]}- tried to their satisfaction; and it was ascertained that no oil could be found in this tract of land. The commissioners, after advertising the land in the manner directed by the court, offered it for sale on the 26th of October, 1872; they had a number of bids for the property, the highest bid being $17,000.00. Being unwilling to take this price, and supposing a higher bid might be made, they adjourned the sale for two day*?. The land was cried from ten o’clock A. M. till nearly sundown, there being numerous bids made during the day, the highest bid then offerecj^being by Brooks, $21,500.00. They again adjourned the sale till the next day for the express purpose of allowing some bidders, who were competing with Brooks, ah opportunity of making a personal examination of it. They made such examination, and when the property was again put up, at two o’clock P. M. the next day, they declined to bid any more. It was cried till nearly sunset, and no other bid being made, it was knocked down to Brooks. It had only been advertised at that time in the county paper. It may be, that had it been then advertised in some city newspaper) it might perhaps have brought a higher price; but the commissioners were not authorized to advertise it except in the county paper. An advertisement in a city paper would have cost $150.00; and as the court had modified the former decree, and directed its advertisement in a county paper only, the commissioners would not have been justified in advertising it in a city paper. The terms of the sale were complied with by the purchaser; and the commissioners reported the sale to the court; and it seems to me clear, that under these circumstances, no blame can be attached to them, even as wanting in sound judgment in accepting this bid and reporting the sale to the court.

On the second day after this sale, there being no exception to the report of the commissioners, this sale was confirmed, and a deed ordered to be made at once to the purchaser, Brooks. The question is, whether on the application of eighteen of the owners of this land in the bill in this cause to set aside and annul this decree as fraudulently or improperly obtained from the' court the circuit court ought to have set it aside, or whether it ought to have done, as it did by the decree of November 27, 1874, dismiss-the plaintiffs’ bill at their costs. The . court, having in. view of the facts upon which it acted,. n0 1,eason for believing that this sale was not satisfactory t° all the parties interested, did not perhaps err in confirming this report so speedily. One strong reason doubtless for the inference by^he court, that all parties interested in these suits were satisfied with this sale, was, that the counsel of Buchanan and West did not except to the report of the sale. They according to a previous decree of the court were entitled to more than forty-six per cent of the proceeds; and if they, or rather their counsel, for they were not. there, were satisfied with the sale, it furnished the court very strong reason for believing that the sale should be confirmed.

But if the fact had been made known to the court by Smith, one of the counsel of these trustees, Buchanan and West, that he was one of the purchasers o( this property in conjunction with his brother-in-law, Brooks, with whom his clients, the trustees, had been carrying on the principal controversies in these suits, and that his clients did not know that he had made any arrangement with Brooks to purchase this land jointly with him, and that none of the cestuis que trust were aware of any such arrangement, or that he was a joint purchaser of the lands with Brooks, it is obvious that the court ought not to have confirmed this sale, until ample opportunity had been given to Buchanan and West and each of these cestuis que trust to ask to have this sale set aside; for we have seen, if any of them objected to this sale, it ought under these circumstances to have been set aside without regard to the price that had been paid for the land, it being the right of any of these parties to set it aside at their option. Had this opportunity been afforded them, it is obvious that this sale would never have been confirmed, as no less than eighteen of these cestuis.que trust offered a petition to the court at its next term, and doubtless as soon as they could after they heard of this sale and learned the real facts. These facts were made known to them by Smith putting on record a deed for one moiety of this tract of ]and. Which deed was recorded November 25, 1872, about four weeks after the sale had been confirmed; and it recited the fact that Brooks and Smith had entered into this agreement to purchase this land jointly, and gave the date and substance of the contract, and stated that the purchase had been made in Brooks’s name but jointly for him and Smith, pursuant to this agreement.

The omission of Smith, the counsel of the trustees, to inform the court of these important facts, though unintentional, it seems to me furnishes ample reason for setting aside the decree, as the conclusion of law under such circumstances is that it was fraudulently procured. It is insisted however that this objeotion to this sale, and therefore to this decree, can only be urged by the trustees, Buchanan and West, whose counsel only Smith was. Some judges, we have seen, think that the only safe rule for the courts to adopt is, to prohibit an attorney in a suit from bidding for property sold under a judicial Hecree in the suit, even though his client expressly and with full knowledge of all the facts assents to his purchasing, believing that this rule is essential to obtaining fair sales and doing justice to other parties to the suit. There is much strength in this view; but it may be perhaps too stringent a rule, and rve do not mean to decide in this case whether or not this is the proper rule, as it is unnecessary for us in this case to express an opinion on this point. It would be necessary to determine ir, if Buchanan and West had not been trustees and confidential agents of the other owners of this property; but being such, they could not, as we have seen, have assented to their counsel purchasing this property at this sale without a breach of faith on their part to their ces-tuis que trust; and of course they cannot in this suit, as they have done by their answers, waive any objection to the purchase of the land by Brooks and their attorney, Smith, without a breach of faith to their eestuis que trust. In other words, the consent of their eestuis que trust, ob-fained after the fullest information and in the fairest manner, was necessary to enable these trustees to purchase this property; and like consent on their part was at least as necsssary to enable Smith to be a purchaser at this sale; and these oestuis que trust have therefore a right to set aside in this suit this decree confirming this sale, as Smith, the counsel of their trustees and confidential agents, was a secret party to the purchase, which for that reason ought not to have been confirmed by the court, and would not have been, but for the improper suppression and concealment from the court of the fact that he was interested in the purchase.

I do not mean to be understood as expressing the opinion that either Smith or Brooks, in entering into their contract to purchase this land, or in purchasing the same, or in failing to make known to the court at the time this sale was confirmed that Smith was a party to this purchase, designed to do any intentional wrong to any one. On the contrary, it is obvious that in all these things they thought they were doing what they'°had a legal right to do without the consent or approbation of the trustees or of any of the oestuis que trust. Persons who intend to commit a fraud never put upon the record of the court their fraudulent conduct. And the fact that Smith and Brooks voluntarily and unnecessarily inserted in the deed from Brooks to Smith the whole of these transactions, which we deem improper, show's clearly that they 'were not conscious in their transactions of doing any wrong to any person. But their ideas of propriety cannot be the guide of the courts. These transactions are set aside and condemned, not because they were actually fraudulent on their part, but because it is contrary to public-policy to permit them to stand and be effective.

In the bill in this cause the plaintiffs hot only ask to have this decree of confirmation set aside and annulled, as improperly obtained from the court, but also to have declared null and void the purchases of the trustees, Buchanan and West, from their several oestuis que trust, and also to require them to settle their accounts; but nothing can be properly done in this cause, except the nullifying of this decree of confirmation and the decree and deeds based upon it, and all other things prayed for by the plaintiffs being foreign to the only proper object of this suit, and being things which ought to be done, if done at all, in the suits of Brooks v. Buchanan and West et al., and Buchanan and West v. Brooks et al., now pending in the circuit court. See Manion v. Fahy, 11 W. Va. 500. In those suits, all the proper parties having been first made defendants, the court should determine on the evidence, which is now in or may be hereafter brought into said suits, whether on the principles laid down in this opinion said purchases claimed to have been made by the trustees should be set aside, and in making these defendants, care should be taken to see that they are made personally defendants by name, and not, as parties have been made in these causes, by their mere partnership names. It is unnecessary to decide whether it is absolutely necessary that the Donnally Tract Petroleum Company should be made defendants in said cause. It is obvious that they can properly be made defendants, and therefore when new defendants are being made to said causes, as must be done, this company should also be made a defendant.

For these reasons the decree of the circuit court in this cause of November 27, 1874, dismissing the plaintiffs’ bill and decreeing that the defendants recover of the plaintiffs their costs about their defence expended including $30.00 as allowed by law, must be reversed, set aside and annulled, and the appellants must recover of the appellees, F. F. Brooks and Isaac N. Smith, their costs in this Court expended; and this Court proceeding to render such a decree as the said circuit court-should have rendered, must set aside, nullify and avoid, so much of the decree of October 31, 1872, in the causes of Brooks v. Buchanan et al.; Buchanan and West v. Brooks et al., and Harris et al. v. Buchanan and West et al., as approves and confirms the report of the commis* \sioners of sale, Quarrierand Knight, and as confirms the sale made by them to F. F. Brooks, and as appointed E. B. Knight a special commissioner, and directed him as such to execute and acknowledge for record an apt and proper deed conveying to said F. F. Brooks the tract of land purchased by him at said sale, and so much of said decree as modified the decree of the October term, 1871, and allowed said deed to be then made to the purchaser, and also the deed made by said Knight as such special commissioner to said Brooks dated November 12, 1872, and also the deed from said Brooks to said Smith dated November 16, 1872, and also the two orders made in the cause of Brooks v. Buchanan et al., of date November 8th and November 9th, awarding rules against certain persons to show cause why they should not deliver posession of said land to F. F. Brooks; that the plaintiffs recover ot the defendants F. F. Brooks and Isaac N.' Smith their costs expended in the circuit court of Kanawha county ; and that this opinion and decree be certified to the circuit court of Kanawha and filed in the papers of said two causes now pending in said court, with instructions that the court shall take such steps as are necessary to put the . purchaser of said land, F. F. Brooks, and all other persons. in the same position, that they were in before the confirmation of said report of said commissioners of sale and of said sale; and take such other proceedings in said causes as are in accordance with the principles laid down in this opinion, and further according to the rules governing courts of equity.

The other Judges Concurred.

Decree Reversed. Cause Remanded.

Case Details

Case Name: Newcomb v. Brooks

Court Name: West Virginia Supreme Court

Date Published: Dec 20, 1879

Citation: 16 W. Va. 32

Court Abbreviation: W. Va.