81 Ky. 286 | Ky. Ct. App. | 1883
delivered the-opinion of the court.
Jenkins died insolvent, and his estate, or a part of it, was committed to the hands of the appellee Hodge, as special commissioner, for the purpose of selling the property and holding the proceeds for distribution between creditors. Titherington being a creditor, filed his claims against the estate, and insisted that he was entitled to priority, his lien growing out of certain partnership transactions between himself and the decedent Jenkins. The case was on the docket for many years, and, before its termination, Titherington died, and his estate went also to the commissioner, Hodge.
James Titherington was the administrator of this estate, and Hodge the co'mmissioner or receiver of both estates. The administrator of Titherington being pressed by the creditors of the estate for payment, and the cases lingering on the docket for years, finally sold the claim of his
The law has wisely removed all temptation from officers of the court and others occupying fiducial relations to the parties and the property in litigation, in declaring that the purchase, when made, shall inure to the benefit of the parties interested, and is voidable at their election.
High on Receivers, after discussing the relation of such a fiduciary to the fund under his control, proceeds to say: “The general rule, as above stated, denying receivers the privilege of becoming purchasers of property pertaining to their trust, is entirely independent of the question whether any fraud, in fact, has intervened.” (Section 194.)
The equitable doctrine is so well understood that it requires no reference to authorities in support of it, and the court below erred in dismissing the petition as against Hodge.
The question next arises as to the liability of -the surety on the bond of Hodge as special commissioner. The petition fails to state a cause of action against the surety, and the facts of the record show that the surety is not responsible. The action is on the receiver’s bond against principal and surety for failing to pay the money over under an order of the court. Waiving the question as to whether such an order had been entered, and still the surety is not liable.
At the time this bond was executed, the fund in controversy, so far as the record or the facts show, was the property of the appellee Hodge. The appellant had not then elected to avoid the contract, and the transfer had been made by the appellant to Hodge before Barrett became his surety. It appears that after this transfer had been made, some of the creditors becoming uneasy, required Hodge to
It is not alleged that the surety had notice of any fraud or of the intention of Titherington to avoid the contract.
The appellant had' placed it in the power of the appellee, Hodge, to waste or dispose of the fund as his own long before the surety became liable, and the latter is in court with his defense, insisting that the purchase was made in good faith. The party entitled to the debt will not be permitted to transfer it to the fiduciary and then reclaim it of a surety who became subsequently bound for the acts of the trustee, without any knowledge of the fraud, if any, or without the 'knowledge- even of the character of the transaction between the parties. As between the surety and the appellant, the latter must bear the loss, and it would be unjust to the surety to hold otherwise.
The judgment is therefore reversed as to Hodge, and remanded for further proceedings, and affirmed as to Barrett.