197 A.D. 808 | N.Y. App. Div. | 1921
The plaintiff and defendant Mahoney, two of the trustees under the will of Daniel A. Skinnell, deceased, and defendant Skinnell, by means of a corporation organized for the purpose and owned and controlled by them, purchased a business which had been carried on by decedent. The purchase price fixed by them was paid from the proceeds of the business so purchased, and the capital stock of the company, except a small amount allotted to defendant Morley as manager, and one-fifth thereof left unissued, was divided among the said two trustees and defendant Skinnell, each receiving twenty-five shares. These shares of stock represent the profits made in their dealings with the trust property. The said two trustees have violated the cardinal rule of law that trustees may not deal with trust property to their own advantage, and that if they do they are accountable therefor to the estate. In this respect there is no difference in the situation of the plaintiff and the defendant Mahoney. They have alike violated this rule of law and are accountable to the estate for the shares of stock that they have issued to themselves. The defendant Skinnell, acting jointly with them, is subject to the same disability. The motive of the trustees is a matter of indifference. They may have been moved by the most laudable motives. They may have devised the plan of selling the business to a corporation organized for the purpose of purchasing it, as the best method of preserving it. The appraisement of the property may have been, as I think it was, honestly and fairly made, and yet they were disqualified, by an inflexible rule, from dealing with the trust property to their own profit. The consent of the plaintiff and defendant Skinnell did not validate the transaction. Théy did not own the estate. Their interest was that of cestui que trust under an inalienable trust, and there was a contingent remainder to their issue in case of death before reaching the age of forty-five.
The shares of stock issued to the plaintiff and to defendants
Judgment accordingly, with costs to the plaintiff in this court and in the court below, payable from the estate.
Rich, Putnam, Kelly and Jaycox, JJ., concur.
Judgment reversed and judgment directed that plaintiff and defendants Mahoney and Skinnell transfer each twenty-five shares of stock of the corporation to the executors and trustees under the will of Daniel A. Skinnell, deceased, with costs to the plaintiff in this court and in the court below, payable from the estate.
