Penny v. Jackson

Dec 15, 1887

Versions:85 Ala. 67

OLOPTON, J.

— We do not construe the bill as seeking to impeach and set aside for fraud the decrees rendered in the chancery suit brought by the appеllee, Fannie D. Jackson, as executrix of the will of George Schoenberger; nor as seeking to vacate the sale made under the decrees. The manifest purpose of the bill is to raise a constructive trust, on the ground that Mrs. Jackson purchased the real estate in her character of executrix, and for the benefit of the estate of the testator. Its equity is rested on the general doctrine, that a party who is charged with a duty in regard to property, which is inconsistent with the character of a purchaser for his own use, will not be permitted to purchаse an interest in the property, and hold it for his individual advantage. The special prayer of the bill is, that Mrs. Jackson may be declared a trustee of the homestead for all the devisees to whom it was devised by the will, subject to the amount for which a resulting trust was decreed in her favor.

It is unquestiоnable, that a trustee is required to act, in all matters pertaining to the trust, with the utmost good faith, and solely for the benefit of the beneficiary; and he will not be ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍allowed to deal with the subject of the trust, so as to gain, directly, or indirectly, any advantage to himself. An advantage so gained will be cоnstrued as enuring to the benefit of the cestui que trust. Courts of equity will raise a constructive trust out of the fiduciary relation, when by virtue thereof the trustee acquires titlе to the property, under such circumstances that he should not in equity and good conscience hold and enjoy the beneficial interest thereof. The efficient administration of justice between the parties is the purpose of impressing the trust, and fraud, actual or constructive, as considered in equity, is an essential element. The existence of a fiduciary relation is not of itself sufficient. There must be an act or transaсtion in violation of some duty owed to another, whose beneficial ownership is thereby offended— some use of the fiduciary functions to obtain an advantage inconsistent with the obligations of his position, which equity stamps as constructive fraud. Says Mr. Pomeroy: “An exhaustive analysis would show, I think, that all instances *71of constructive trusts, so called, may be referred to what equity denominates fraud, either actual or constructive, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍as an essential element, and as their final source.” — 2 Pom. Eq. Jut., §§ 10, 44; Perry on Trusts, § 166.

Mrs. Jackson as executrix, in March, 1879, filed a bill in the Chancery Court of Madison county, for a construction of the will of the testator, the removal of the administration from the Probate Court, the administration of the estate in the Chancery Court, аnd for the enforcement in her favor of a resulting trust to the extent the money of her statutory separate estate had been used in discharging аn incumbrance on the homestead by her testator, who was her husband and trustee. The court rendered a decree construing the will, and ordering а reference to the register to ascertain and report the amount of the indebtedness of the testator, the value of his real and personal property, and the extent of the incumbrances thereon. After the coming in of the report, a decree was made, in September, 1880, declaring a resulting trust in favor of the executrix as to a, portion of the homestead, and ordering it sold in satisfaction thereof. In May following, such portion of the homestead was sold under the decree by the register, and purchased by Mrs. Jackson, to whom he subsequently made a сonveyance. The complainant Mrs. Penny, and Annie D. Schoenberger, a defendant in the present bill, who are devisees under the will, were made parties to the former suit, and a guardian ad litem was appointed for them.

The decrees in the former suit, though rendered against infant defendants, are as binding and conclusive as if they were ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍adults, and can only be impeached upon grounds available to adult parties. They were represented by a guardian ad litem., who madе defense under the supervision and protective care of the court, and could not have been permitted to impair or surrender аny of their rights by his misfeasance or non-feasance. The presumption is that the- court did its ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍duty, and took care that the guardian ad litem observed his. Waring v. Lewis, 53 Ala. 615; Chardavoyne v. Lynch, 82 Ala. 376. The fact that Mrs. Jackson was executrix, did not deprive her of the right to purchase the property, nor render her purchase voidable. At an early day the principle was settled, that a personal representative may purchase property at a sale made by himself under an order of the Probate Court, if he has an interest in the рroperty; and that such purchase will be sustained, if the sale is made in the *?ordinary mode, and there is an absence of all unfairness. Brannan v. Oliver, 2 Stew. 47. As respects executors and administrators, ‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‍this rule has never been departed from.

In Harrison v. Mock, 10 Ala. 185, the trustee, who had caused a sale of part of the trust property under execution for his own benefit, and became himself the purchaser, was considered as having purchased in his capacity as trustee for the benefit of those concerned in the trust. But the conclusion is based on the grounds, that the deed of trust provided for the payment of all the creditors ratably, and that by accepting the trust the trustee waived his lien, and consented that his own debt should be thus apportioned. In the former suit, the Chancery Court had jurisdiction of the subject-matter and the parties; the proceedings appear to be regular; the sales were made by the register, and not by the executrix, in the ordinary mode, and under such circumstances as to command the highest price. So far as appears from the proceedings, Mrs. Jackson did no act by directing or interfering with the sale, or otherwise, which was in violation of her duty as executrix, and did not use her relation or functions, as such, to gain any advаntage to herself. She had the right to purchase for her own use and benefit, and her purchase will be sustained in the absence of fraud, either аctual or constructive. The bill contains the general allegation, that the proceedings in the suit were “not had for the purpose of сollecting her claim against the estate of the testator, but for the purpose of bringing about a sacrifice of the homestead for hеr benefit, and to defraud the other devisees of their interest in it, by imposition on the court and fraudulent abuse of its process.” An allegation of frаud in general terms, without stating the facts constituting it, is insufficient, and a demurrer to such bill is not a confession of the fraud. — Flewellen v. Crane, 58 Ala. 628. No act of imposition on the court, or of abuse of its process, is averred. It is not charged that Mrs. Jackson did anything, which she had not a right to do, and which she did not do in a regular and legal mаnner.

On the averments of the bill, she can not be considered as having purchased the land sold in May, 1881, in her character of executrix, and for the benefit of the estate. As to the land sold in October, 1881, the allegations of the bill are too general and indefinite to justify us in an expression of opinion. If the decree of sale of July, 1881, was obtained by her without a necessity of sale, the property sold there*73under by her, or by her direction, and purchased at a grossly inadequate price, it may be that she should be ^considered as having purchased it for the benefit of the estate.

Affirmed.