28 Me. 355 | Me. | 1848
The opinion of the Court was drawn up by
On Nov. 9, 1837, the defendant having that day taken a note from Jonathan Tucker, Jr. for the sum of $1725, payable in two years, with interest quarterly; and his name being upon a note to Israel Small, signed by Tucker as principal, and the plaintiff as surety, dated Jan. 20, 1836, payable in two instalments, one on the 1st of May, and the
The bill charges, that the parties thereto were co-sureties on the note to Small. This the defendant denies in his answer,-saying that he refused to become such with the plaintiff, but put the following upon thé back of the note. “ I hereby guaranty the payment of the within note. J. B. Thornton.” There is no evidence in direct conflict with this denial; the written agreement refers to a note indorsed by the defendant; but when that was written' the note was not present, and it is evident that the language was descriptive of the note in general terms, and not intended for a distinction between the defendant as indorser and guarantor. Tucker does not testify with certainty, that the indorsement was not filled, when the defendant first put his name thereon, before the note passed to Small; but Small thinks the guaranty was filled, when he received the note. On Dec. 9, 1837, the agent of Small called upon the defendant, and he renewed his guaranty for a consideration paid in behalf of Small, to pay within one year, and the previous guaranty was thereupon erased. Soon after this, Tucker became insolvent, and as the defendant states in his answer, informed him, “ that he must take the real estate aforesaid, and
No unwillingness on the part of the plaintiff-, to be the sole surety on the note to Small, at the time he signed it, is shown. When the note was first written a blank was left for the insertion of the name of another person as surety, and that blank was afterwards filled with the name of the defendant, but at what time does not appear; but there is nothing showing that the plaintiff placed his name upon the note under any agreement, that there was to be another surety. As the note was when received by Small, the defendant was not a co-surety with the plaintiff, and was not liable to make contribution to him, if he should have paid the note after its maturity. Oxford Bank v. Haynes, 8 Pick. 423 ; Largley v. Griggs, 10 Pick. 121.
Under the legal rights and liabilities arising from the relations
The subsequent guaranty made by the defendant was a contract in which the makers of the note had no connection, and it could not be to their prejudice. The note was taken up under the subsequent agreement between the holder and the defendant, and the action against the plaintiff was by the indorsee against him as the maker.
The plaintiff seeks relief of the Court sitting as a court of equity, by a decree, that the defendant be required to a specific performance of his written agreement, and from the proceeds of said property to discharge the judgment against him and to account for the rents and profits of said estate from the time the same came to his possession: and also that he be perpetually enjoined from enforcing or reviving the judgment in the name of Perkins.
A trust is an equitable right, title or interest, in property real or personal, distinct from the legal ownership thereof. Story’s Eq. <§> 964. A declaration of trust, is required to be in writing; but it is not necessary that it should have any particular form or solemnity in writing, nor that the writing should be under seal. Ibid. 972. In this case the conveyance was in its terms absolute, but the agreement executed at the same time makes a part of the same transaction, and clearly declares an express trust. By it a fund was required to be raised, which the defendant was bound to apply according to the terms of the contract and the spirit of the trust. Tucker, who provided the means for raising the fund, was entitled to two years in which to pay the debts to the defendant and Small and take a re-conveyance. In less than one year afterwards finding himself unable to perform the condition, he informed the defendant, “ that he must take the real estate aforesaid, and get what he could from it, for he could do no more for him.” The defendant in his answer gives this direction of Tucker as the
The rights of the cestui que trust in the original agreement may with propriety pass to the plaintiff, as his surety, by assignment, as an indemnity against his liability. By the payment of the debt to the defendant, and the amount of the note to Small, he would, without the assignment, be entitled to the collateral security, provided by his principal for the reimbursement of the money so paid, in the same manner, that the latter would, under the contract with the defendant, be entitled ■ to the surplus, after deducting the amount of those debts. Story’s Eq. 1050, 1057; Bigelow v. Wilson, 1 Pick. 493; Story’s Eq. 499, a, b, c.
It is insisted that the mortgage to Mrs. Hill, which was not excepted in the deed of conveyance, materially modified the rights of one party and the duties of the other. The defendant accepted the trust under a full knowledge of that incumbrance ; and he expressed no wish to surrender it, when he was informed by Tucker, that he could do no more for him. He might have expected before the insolvency of Tucker, that
But as he accepted the trust, he cannot now contend, that any of his acts touching the estate were for his own benefit; all that he did in reference to the property, the law treats as done for the cestui que trust. The taking of the lease of the estate of the mortgagee in possession, the leasing of the same to another at an advanced rent, the payment of the sum necessary to redeem the estate from the mortgage, notwithstanding they may have been intended by the defendant for his own benefit, the law regards as performed in his character of trustee. Story’s Eq. 1211 and 1261.
As long as the relation of cestui que trust and trustee exists, the latter cannot become the purchaser of the trust property ; to him is confided the duty of selling; the interest of a purchaser is in conflict with the duty which he thus assumes. The law holds the two characters as absolutely incompatible, so that the exercise of the two in the same individual is prohibited. When a trustee has undertaken to become the purchaser, the fairness of the transaction, and the payment of the full value, proved to the entire satisfaction of a court of equity, gives them no power to affirm the sale. It is a fundamental principle in the law relating to trusts, that the cestui que trust can treat as a nullity, a sale to the trustee. Warmly v. Warmley, 8 Wheaton, 421. It follows a fortiori, that the trustee can acquire in no other manner an absolute title in himself. And nothing could be regarded as more absurd, than the proposition, that he could derive a title by his own wrongful omission to perform the obligations, which he had voluntarily
Again it is insisted, that Tucker could not claim to have the trust executed upon the estate, improved as it is contended that it has been, without first allowing all the expenditures thereon ; that he stood by, saw the defendant enter upon the estate as his own, called for no sale or reconveyance; and when he made an assignment' after large amounts had been thus expended, he could invest his assignee with no right, which he did not himself possess. It is true, that the plaintiff’s rights under the assignment are not superior to those of the assignor; and when a party has materially improved the ' estate under a belief honestly entertained, with reasonable grounds for that belief, that he is really the owner of the land, and the aid of a court of equity is sought to enforce a title against him, it will be granted only on the condition that such innocent person shall be compensated to the extent of .the benefit, which he has conferred upon the owner. Story’s .Equity, § 799, (a.) Courts of equity require this, because the party who saw that the occupant that made the outlays .and improvements, was misled, and took no means to inform him of his own claim; and if he should refuse to allow this •compensation, he is considered guilty of a fraud, and shall not be permitted to reap the benefit arising from his own wrong. But if his acts and silence do not mislead or in any way influence the other party, there can be no just inference of ¿actual or constructive fraud on his part, — Story’s Equity, <§> •386, — and the trustee cannot deduct the amount of the sums • expended in additions and improvements, to the prejudice of the cestui que trust; it is an established principle that the trustee cannot diminish the trust fund by causing expenditures more than sufficient for necessary repairs upon the trust property, when it consists in real estate. But if it shall be made to appear that upon a sale of the property, the amount receiv
The contract, by virtue of which, the defendant became trustee, defined with precision his duties, under the law; the other party was guilty of no fraudulent concealment; nothing was known to the latter, of which the former was ignorant. The relations to each other and to the estate, all arose from the deed, and the contract to which they were the only parties. The defendant knew he had the legal title, for the purpose of obtaining the value of the property according to the agreement. The improvements were made afterwards by him without authority, when he ought to have known that he could acquire no title to the estate, till he had fully executed the trust. Such expenditure was not contemplated by the parties to the contract. Bui there is no proof that the improvements were made fraudulently, with any intention to prevent a sale, to cause an injury to the other party, to obtain a title to the land, or advantage to himself; but from an unauthorized belief, that the estate had become his own, when the improvements were made.
The defendant’s counsel endeavor to maintain that the Court have not jurisdiction of the suit, as a court of equity ; that the plaintiff by the payment of a note, which he is bound to make, can resort to his action at law for the injury received
The plaintiff is entitled to a decree, that a master be appointed under whose direction the defendant is required to execute the contract by making sale of the estate, the rents and profits of which the master is to take an account. If the estate has fallen in value by reason of the neglect of the defendant to make sale thereof within a resouable time after two years from Nov. 9, 1837, when the contract was made, he is to be charged with the loss, thereby occasioned. If proof be made to the master, that the amount of sales has been increased by reason of the additions and improvements made by the defendant, he may be allowed to retain for his own use such excess, but no farther. The defendant is to be charged with such rents and profits, as the estate would have produced had no additions and improvements been made. From the amount of sales and rents, he should be allowed to apply sufficient to pay off' the mortgage and interest thereon to the time, when he is charged with the rents; 2d to the payment of the sum due on the note of $1725 to himself up to the same time; and 3d, the balance is to be applied in extinguishment of the judgment in favor of Perkins against the plaintiff. And the decree is to be made accordingly.
Case reserved for further proceedings upon the coming in of the master’s report.