Case ID: sc-eq_11/html/0307-01.html
Source: Caselaw Access Project
Author: {"author": "O’Neall, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

• [This case should have preceded the last, but was accidentally misplaced.]
    Stallings and Wife v. Jacob Foreman, Administrator of Isaac Foreman.
    An administrator selling the personal estate of his intestate under the order of the Ordi íary, is allowed to become a purchaser, when he sells fairly and pays the full value. Therefore a purchase of a slave by an administrator at his own sale, under an order of the Ordinary at a fair price and without fraud, was sustained against the bill of the distributees seeking to set it aside [*405]
    The cases in this State, as to purchases by executors, administrators and other trustees, at their own sales, reviewed. [*405]
    On a.review of the rights and liabilities of executors and administrators at common law and under our Acts of Assembly, it seems they may acquire their testator’s or intestate’s property, provided the sale is fairly made under the authority of the will or the order of the Ordinary, and that the price is the true value of the property. [*408]
    The reason of the rule which avoids the purchases at his own sale of a trustee to sell, does not apply to executors and administrators; and those entitled bylaw to administration,would often decline it if prevented from buying [*409]
    Barnwell — February, 1835.
    De Saussure, Chancellor. The bill is filed against the administrator, for an account and settlement of the estate of the intestate, Isaac Foreman. The single point made and argued in this case, is whether the purchase of a slave, named August, made by the defendant, Jacob Foreman, administrator of Isaac Foreman, at a sale of property of the estate of his intestate, authorized by the Ordinary at the instance of the administrator, shall be set aside at the'instance of the plaintiffs, who are entitled to a distributive share of the estate. It appears that the slave, August, was, at the time of the purchase by the defendant at Ms sale as administrator, a boy somewhere about twelve years of age, and capable of being a plough-boy. He has since grown up, and is a very valuable servant, and Ms hire for his annual services, put by the testimony at a high rate, is far indeed beyond the amount of the annual interest of the price, at which he was purchased by the defendant; *not less, indeed, , n9 than three or four times the amount of the interest. The defend- L ’ ant contends that the sale was authorized by the Ordinary, and therefore regular and good; that it was fairly conducted, and that he bid a fair price, viz.: $350, which was not only the just value, but a very high price; that he was at liberty to purchase at the sale, and that he is entitled to hold the said slave under his purchase, and to account accordingly for the price and interest thereon. It is admitted, on the part of the plaintiffs, that the sale was authorized by the Ordinary; but it is contended that the sale was unnecessary, and that the purchase of the slave, August, by the defendant, the administrator, Jacob Foreman, at his own sale, was void, and vested no property in the defendant, who is required to deliver up the slave, and to account for Ms hire. That the sale was authorized by the Ordinary, who has the power, is sufficient for this Court, unless fraud be shown in procuring the order. There is nothing in the evidence to lead the mind to the belief that the sale was unfairly conducted, or that any advantage was taken by the defendant to obtain the said slave, at a price below his full value; and I think that the weight of evidence establishes that the sum of $350, which was bid by the defendant, was not an unfair or short price for a boy of about twelve years of age. The question, then, is really reduced to the simple point, whether a purchase, made under -such circumstances, should be sustained by the Court, for the administrator who purchased; or set aside, at the instance of the plaintiffs, who are entitled to distributive shares of the estate. It is unnecessary to go into the history of the changes which the doctrine has undergone of the authority of executors and administrators, to sell the property of the estate in their hands, at their discretion, or to take it at their appraisement. These powers have been controlled and regulated by statutes founded on experience of the danger of trusting such powers in the hands of men, who might be tempted to abuse them for their own advantage, to the prejudice of persons who are generally widows or minors, and incapable of taking care of their interests., The authority to take the estate at an appraisement has been abolished, and the power to sell has been taken from executors and administrators, and transferred to the Ordinary; a confidential officer of the government, who may grant or refuse the authority to sell, according to his judgment of the propriety of the application of the executor or administrator. Notwithstanding* these wise provisions of 4 the statute, it was found that abuses existed; and that some executors and administrators and trustees, availed themselves of the advantages of their position of sellers, with the power to manage and control the sales, to become purchasers at their own sales, at a price below the real value of the property put up for sale. To check these abuses, the Courts have been obliged to interfere, and in many cases to set aside purchases thus made, in order to protect the interests of women and children. This has given rise to a good deal of controversy, as to what cases the Court would interfere in. It has been held that the only safe rule would be to deny altogether the right of executors, administrators and trustees, to become purchasers under any circumstances, and to declare them all void. This, however, has been considered too strong a course, and even injurious to the estates, as it might prevent these functionaries from interposing their bids to prevent low sales to other persons, and to diminish the circle • of competition. The decided cases fluctuated for some time. There was great uncertainty and division of opinion among the judges, as may be seen in the cases of Drayton v. Drayton, 1 Eq. Bep. 557, and M’Gtaive v. M’Gowen, 4 Eq. Bep. 486. Many other decisions followed, which were made to turn mainly on the ground of fairness in obtaining authority to sell, correctness in conducting- the sales, and fulness of prices bid by the executors and administrators. The abuses were so flagrant and frequent, that there was a strong disposition to declare such purchases void. But the opinion prevailed that they should be held to be only voidable; depending on the circumstances of fairness and propriety and price, in each particular case. This was a pretty good check, but not entirely effectual, because in many cases it was difficult to detect and bring to light the arts and contrivances by which sales were made and purchases at low prices or doubtful prices were obtained. The later decisions appear to me to have settled down on the proper ground. That purchases made by executors, administrators and trustees, at their own sales, were not absolutely void, but voidable — for impositions in obtaining orders for sales without necessity, by misrepresentation of the situation of the estate, or fraud and contrivance in conducting the sale, or management in obtaining the property at low and inadequate prices. And finally, one other protection was added, that the persons interested, who thought themselves aggrieved by the purchases by executors, &c., ^should be at liberty to avoid the sale by dissenting from the same, unless they have L done some positive act by which they have given up or abandoned their right.
    This renders the guard against abuses complete; for persons in fiduciary situations will not be apt to make purchases at low rates, or even moderate prices, when they know that, if ultimately the purchase turned out advantageously for them, they would assuredly be avoided ; but if disadvantageous^, they would remain bound. In the case of Edmonds and others v. Crenshaw & M’Morris, 1 M’C. Ch. Rep 252, 260, it was laid down broadly, that the executor’s purchase at his own sale was void, and the slave purchased was still the property of the estate. — See also 2 John. Ch. C. 252. In Wiggin’s case, 1 Hill’s Ch. Rep. 353-4, decided 1833, Chancellor Johnston stated the rule to be, “that according to the decided cases, a trustee to sell cannot purchase whether he is a party interested or not. If he sells, the sale will be set aside, or he will be held to the purchase as of course, at the option of the parties interested; and as the rule forbidding such purchases is one of policy to prevent fraud, when there is no possibility of proving it, the inquiry is never made whether the sale is or is not advantageous.” This was putting the decision on the broadest ground. Judge Harper, who delivered the unanimous opinion of the Court of Appeals, concurred fully with the Chancellor in his expressions. It is true, that in the Court of law the doctrine has not been carried so far, or has been somewhat modified ; yet substantially it has been supported by the decisions. In the case of Trimmier v. Trail, 2 Bail. Rep. 480, decided in 1831, the Court decided that an administrator, having an interest in the estate, may purchase to the extent of his interest; and a purchase, by an administrator not entitled to a share of the estate, is not necessarily void, but may be confirmed or set aside at the election of the parties interested in the estate. These doctrines apply to all persons acting in fiduciary stations, executors and administrators, as well as those more technically called trustees. In this case, therefore, although the purchase made by the administrator, who had no interest in the estate, does not appear to have been made fraudulently or at a low price, I feel bound to declare it null and void, because the plaintiffs entitled as distributees, have by their bill signified their option that the sale should be set aside.
    It is therefore ordered and decreed that the purchase be set aside and *avoided ; and that the defendant should deliver up the slave in r^4nF; question, named August, for distribution, and that in accounting L before the Commissioner, as he is hereby ordered to do, for the rest of the estate, he account for the hire and labor of the said slave.
    
      Patterson, for the appellant.
    
      Elmore, contra.
   O’Neall, J.

The naked question in this ease is, whether an administrator, selling the personal estate of his intestate, under the order of the Ordinary, can be allowed to become the purchaser, when he sells fairly and pays the full value ? I think he can ; and in this respect executors and administrators constitute an exception to the rule that “ a trustee to sell cannot purchase.”

On tracing this question through the various cases decided, it will be found that no' decision against this position has been made. In the earliest case which can be found, that of Drayton v. Drayton, 1 Eq. Rep. 557, 567, the Chancellors, Matthews and Rutledge, decided the very point, in exact conformity to what I conceive to be both law and equity. Speaking of a purchase made by G. Drayton, one of the testator’s executors, at the sale of his estate, they say : — “ As to G. Drayton’s pur-, chase at the sale of the testator’s estate, we consider it in the same light as that of any other individual; there is no law which prohibits an executor purchasing (without fraud) any property of his testator, at open and public sale.” This was in 1797, and until M’Guire v. McGowen, 4 Eq. Rep. 486, (in 1814) the country remained quietly under the rule settled by the case of Drayton v. Drayton. In that case the precise question now before the Court did not arise; the defendant was the husband of the administratrix, and guardian ad litem of the minors in a proceeding in partition in the Common Pleas, in which the land of the intestate was ordered to be sold, and of which, at the sale made in pursuance of the said order, he became the purchaser. It was held by a majority of the Court, that his purchase was valid. In 1817, in the case of Perry v. Dixon, reported in a note, 4.Eq. Rep. 504, the question was made, whether an executor’s purchase, at his own sale, was good ? The Court, without adverting to Drayton v. Drayton, which was a direct decision of the point arising in the case, and thus constituted a rule (as I can conee*ve) for their government, decided the case as one of J novel impression. Chancellor Waties, holding that an executor, as a trustee to sell, could not be allowed to purchase at his own sale, Chancellor De Saussure said “he was not prepared to go the whole length of the principle” laid down by Chancellor Waties : “that would (he said) exclude executors and administrators from purchasing on their own account, at sales of the estates under their charge, in any case whatever, and thus place them entirely on the footing of mere trustees.”— “ Perhaps a wise policy would place them on that footing, where they ■had no interest; but where they have an interest in the property, it would seem to be too severe a rule to prohibit executors and administrators from purchasing at such sales, at least to the extent of their interest.” Chancellor James concurred in the principle maintained by Chancellor Waties — Chancellors Gaillard and Thomas dissented, and were for reversing Chancellor Waties’ decree. From this time to 1824, there were a variety of cases involving, in a greater or less degree, the principle maintained by Chancellor Waties, in Perry v. Dixon: but in none of them did it receive the sanction of the Court. In the case of Bullock v. Williams and wife,(a) the purchase made by Mrs. Williams, who was the administratrix of her former husband, at her own sale, was attempted to be set aside, and was supported by the Circuit Chancellor, on the ground of its fairness. That decree was affirmed by the Court of Appeals, or acquiesced in by counsel thoroughly acquainted with the current of decisions. So far as I am aware, the question, divested of circumstances of actual or legal fraud, has not been presented to the Court of Appeals since 1824. In Edmunds v. Crenshaw & M’Morris, 1 M’C. Ch. Rep. 252, it was adjudged by Chancellor Thompson, that the purchase of the executor, M’Morris, at the sale made by himself and his co-executor, was void, and his decree was affirmed by the Court of Appeals. But in that case the defendant, M’Morris, never complied with the terms of the sale, and was, from insolvency, incapable of paying the price at which he made the purchase, at the time the decree was pronounced. So that that decision can be maintained upon other principles: and I know that the recovery was not rested by the plaintiffs upon the abstract principle of equity, that a trustee to sell is not allowed to buy at his own sale. In Trimmier v Trail, 2 Bail. 484, I indicated my opinion on this question : and as I am *about giving utterance to that opinion more formally and authoritatively, it is not necessary to take any more specific notice u' of that case. In ex parte Wiggins, 1 Hill’s Ch. Rep. 353, my brother Harper, with the concurrence of the whole Court, laid down the rule, that the purchase of a trustee to sell was voidable on the application, and at the instance, of any of his cestui que trusts. On looking into'that case, it will be seen it was a sale and purchase by an assignee : and does not therefore conclude the exception now insisted on, in favor of executors and administrators. After this review of the adjudications in this State, it will be seen that the case of Drayton v. Drayton has never been reversed; and that, on the score of authority, the exception for which I contend is made out.

But independent of this, it is enough for my purpose, that in establishing a principle of law, I am not guilty of the unpardonable sin (as some seem to think it) of reversing some ill-advised and hasty opinion of our own, or of our respected predecessors.

In Perry v. Dixon, Chancellor De Saussure, with his usual good judgment, thought that executors and administrators ought not to be put on the footing of mere trustees: and I hope to be able to demonstrate, that so far as the question before us is concerned, they are not, and they cannot be so regarded.

At common law, an executor or administrator is the legal owner of the goods and chattels of the testator or intestate ; and before 1824, he could legally dispose of them to another, without even the order of the Ordinary. The goods and chattels of the testator, after the payment of debts and legacies, were formerly, both at law and in equity, the property of the executor. So too, an administrator, by paying the debts and the shares of the distributees, without even a sale, would, in England, have made the goods of the deceased his own. In England, and in this State, until 1145, P. L. 202, the executor or administrator could only be called on to account for the appraised value of the testator or intestate’s goods. This was the only standard by which creditors, legatees or distributees, could charge him. To the goods themselves, if aliened or wasted, they had no right: and until 1145, executors or administrators might lawfully take the goods as their own, at the appraised value. In 1145, the Legislature recited, that “Whereas a custom hath too much prevailed among executors and administrators, of taking estates or some parts thereof, at *4(181 ^e aPPra^ement, when such appraisement *hath been under the 4 true value,” and for remedy thereof, enacted, “that no executor or administrator shall hereafter be permitted to take any estate, or any .part thereof, at the appraisement, and that no appraisement, to be made as aforesaid, shall be binding or conclusive, either upon the creditors, legatees, next of kin, or other person interested in such estates, or upon the executors or administrators; but all, and every such executors and administrators, shall be accountable and chargeable for the true value of such estates, any practice to the contrary notwithstanding.”

This review of the rights and liabilities of executors and administrators at common law, and under the Act of 1745, clearly shows, that by paying the true value, they might acquire, as against their cestui que trusts, the goods of their testator or intestate. For the Act of 1745 restricts their general ownership to an acquisition for the true value. This certainly shows, that an executor or administrator was something more than a mere trustee : for if he paid the full value of the goods to the creditors, neither they nor the next of kin could question his rights. Let it be remembered, that an executor or administrator never was a mere trustee to sell: his trust was and is, to collect the personal assets of the deceased, to pay debts and legacies, and the residue to distribute according to the will or the law. In 1745, the Ordinary was not authorized to order sales of the personal estate to be made: in 1789, he was clothed with that power, for division, payment of debts, or to prevent the loss of perishable articles: and in 1824, the executor (when not authorized by the will to sell) and the administrator were prohibited from selling without the permission of the Ordinary. These several acts make, as I conceive, the prerequisites to the validity of a purchase, by an executor or administrator, that the sale should have been fairly made by the authority of the will, or by the order of the Ordinary, in a case in which he had jurisdiction, and that the price is the true value of the goods. If this be not the result of the Acts of 1824, 1789, and 1745, some one of them must be inoperative. This will not be contended for.

. An executor or administrator, however, cannot be regarded as a mere agent to effect a sale. He generally is greatly interested in the estate of which he has the management. Is he to be excluded from acquiring a favorite slave, when he is willing to give more than every other bidder ? Can it be that his purchase at one dollar more than A.’s bid, shall be set *4091 as^e > an<4 yet, if be bad suffered the *property to go off at A.’s 4 bid, the sale would have been good ? The reason of the rule— the prevention of secret frauds in the purchases of trustees to sell — does not apply to sales made by executors or administrators. They are made in public, in the neighborhood where the property is known, the sale is conducted by an indifferent person, an auctioneer employed for the occasion ; if fraud is committed, it is obliged to be known to the spectators or auctioneer, and can therefore be proved; and hence there is no necessity for an artificial rule to prevent its perpetration.

The application of the principle, that a trustee to sell cannot be allowed to purchase at his own sale, to executors or administrators, would often compel executors to decline to qualify as such: and would prevent the widow or children of an intestate from claiming the right of administration, guarantied to them by law. For if they assume any of these characters, (i. e. executors or administrators,) under the rule stated, they cannot buy any of the personal property of the deceased, which may be sold under the will, or the order of the Ordinary. The fight to buy at such sales is often of essential importance to persons named executors, the widow and the children ; and hence, if as executors or administrators they could not buy, they would be compelled to forego the executorship, or administration. This would be making a mere rule of equity, intended to subserve justice, work a positive legal wrong, and carry out and enforce the grossest injustice.

For these reasons, I have come to the conclusion, that an executor or administrator is not to be regarded as a mere trustee to sell: that his own purchase at Ms own sale, when fairly made in pursuance of the will, or under the order of the Ordinary in a case of which he had jurisdiction, for the true value of the goods and chattels so sold, is good; and must be supported both in law and equity.

In this case, the administrator has shown that he sold by the order of the Ordinary, in a case of which he had jurisdiction; that the sale was fairly made, and that he purchased at the true value.

■ It is therefore ordered and decreed, that so much of Chancellor De Saussure’s decree, as sets aside the administrator’s purchase of the slave August, be reversed.

Johnson and Harper, Js., concurred.

An Act of the Legislature was passed on the 18th December, 1835, entitled, “An Act to reform and amend the Judi- L . ciary System of this State,” which repealed the Act of 1824, establishing a Court of Appeals; and provides, that from the Judges of the said Court of Appeals, two shall be designated by ballot of both branches of the Legislature, to act as Chancellors, and that the remaining Judge shall perform the duties of a Judge of the Courts of Law; and that the Law Judges and Chancellors, shall meet and sit at Columbia on the fourth Monday in November, and the third Monday in July, — and at Charleston on the first Monday in January, and the fourth Monday in April, in each year, “for the purpose of holding the Court of Appeals, in hearing and determining all motions which may be made for new trials, and in arrest of judgment, and such points of Law and Equity as may be submitted to them, with the same powers now exercised by the Court of Appeals : Provided, that not less than a majority of the Law Judges, and a majority of the Chancellors, shall hold said Court; and provided also, that no Chancellor or Law Judge, by or before whom a case has been heard or tried, shall > exercise appellate jurisdiction thereupon in said Court.”

In pursuance of this Act, and in the same session, -the Hon. David Johnson, and the Hon. Wm. Harper, were designated by ballot as Chancellors; and consequently, the Hon. J. B. O’Neald, the remaining Judge, became a Judge of the Courts of Law. 
      
      Not reported.