Case ID: miss_15/html/0409-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice Sharkey", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William S. Scott et al. vs. Thomas Freeland.
    Whenever a trustee sells the trust estate and. becomes himself the purchaser, the sale may be set aside at the option of the cestui que trust, as a matter of course; without regard to the fairness or unfairness of the sale; in setting the sale aside, however, the court will order the property to be resold ; and if it should not bring a higher price on the second sale, then the original sale is confirmed, or rhe court, in its discretion, may set aside the sale entirely if necessary, and order the purchase-money to be refunded. The same rule applies to a purchase by a guardian of his ward’s property.
    Where a trustee has become the purchaser of his cestui que trust's property, if the cestui que trust do not in a reasonable time take steps, after he comes to a knowledge of the sale, or, if he be a minor, after his disability is removed, to set the sale aside, his assent to the purchase will be implied** Where, therefore, W. S. died, leaving five children, W. became guardian for two of them, B. for two, and F. for one, and the guardians applied for and obtained an order of sale of the realty of their wards, and F. became the purchaser; at the time of sale the oldest of the wards \vas twenty years old, the youngest about twelve; ten years after the sale, the wards exhibited' their bill against F. to have the sale set aside, because F., their guardian, was the purchaser of the property: Held, that the laches of the two- oldest children, and their delay and neglect in not applying earlier to have the sale set aside, implied an affirmance of the sale by them, and precluded them- . from the relief they sought.
    The assent of the cestui que trust to the purchase of the trust property by the. trustee, in order to ratify the sale need not he express, it is often implied' from circumstances, one of the strongest of which is a failure to take immediate steps, on the cestui que trust’s obtaining a knowledge of the sale, •• and being freed from disability, to have the sale set aside.
    Where property of a ward has been purchased by his guardian, and the ward,, on arriving at age, receives the value of the property sold, with a full knowledge of what had been done by his guardian, it is an affirmance of the purchase of the trust property by the guardian, and vests the property in him ; though the reception by the ward of his distributive share, on his arrival'at age, ought not to be construed too strongly against him, and ought not to-operate to his prejudice when it is obvious that he acted without due precaution.
    
      On appeal from the superior court of chancery; Hon. John A. Quitman, special chancellor.
    The bill in this case was filed by William S. Scott, Thomas Scott, and Robert Scott, and states that William Scott, of Claiborne county, died seized and possessed of a tract of land, containing seven hundred and twelve acres, in that county. That the complainants are his heirs.
    That on the 20th January, 1829, the legislature passed a law authorizing the defendants, Jeremiah Watson, William Briscoe, and Thomas Freeland, who were then guardians of complainants, to sell said tract of land, at auction on a credit of one, two, three and four years, on conditions specified in the act, which it is not necessary to set out. That on the 9th February, 1829, the orphan’s court of Claiborne county ordered the sale of the same land on the same terms. That said defendants did offer the land for sale on the 19th December, 1829, and Thomas Freeland bid therefor twelve dollars per acre, including the right of dower; and the defendants executed a deed to him.
    That Freeland was at that time guardian of William S. Scott, and caused it to be reported that he would purchase the land, and consequently there were but few bidders at the sale, and thejand sold for less than it was worth.
    That persons called to see the land before the sale, but Free-land would not show it. And he used every exertion to-cause the land to sell as low as possible. That shortly after the death of William Scott, letters of administration were granted to Freeland and Watson, and Freeland took possession of the real and personal estate, and managed them. That the personal estate was ample to pay the debts and there was no necessity to sell the land. And if Freeland had not desired to purchase he would not have procured the authority. That he took possession of the land and continued to hold adversely to complainants from the sale, until the filing the bill, and received the rents, issues and profits; and cultivated six hundred acres of land, worth fifty dollars per acre.
    That complainants were young when the sale was made, and knew very little of the transaction. And when they set-tied with their guardians, did not inquire from what source the funds arose which„were paid to them ; but they have never confirmed the sale; and contend it was in fraud of their rights.They pray that the sale may be set aside.
    The answer of Freeland admits that William Scott died, seized of the land, that complainants are his heirs, that he was an administrator, and is guardian, as stated. Admits the act of the legislature and order of the court to sell the real estate, which he deemed for the best interest of the heirs, the estate being in debt and a sale of something inevitable; admits the purchase by him, and avers he gave a full price, which was so considered at the time, which induced him to take the deed direct to himself; he denies that many persons called on him to see the land. Also denies that he used exertions, to cause the land to sell as low as possible. States that he resigned the guardianship of William Scott, and William Briscoe became his guardian. States he has long since paid for the land, and presumes it has been appropriated to paying the debts of deceased, that is, in remunerating the guardians for advances, and in distribution among those entitled.
    That he intended to account for the personal estate, and believes he did, and promises to produce a copy of the record of the probate court showing it, which account also embraces the proceeds of the land and the negroes. That he has accounted for all he ever received of the estate.
    That complainants, since they became of age and when they understood what had been done in reference to the estate, received their distributive portions of the personal estate and the proceeds of the land. States the youngest was fifteen, and the eldest twenty years old at the time of the sale, that more than nine years have elapsed since he held adversely. That he has a relinquishment of dower from Scott’s widow; that he had only one hundred and fifty acres in cultivation, worth three or four dollars per acre rent; he admits that the personal estate was sufficient to pay the debts; but insists it was for the best interest of the heirs to sell the land; that complainants accepted the proceeds with such knowledge of the. facts and with that belief, after they came of age. That they were tempted to such a recovery of the land by its rise in value, and insists that they are concluded by their conduct.
    The bill was taken for confessed against Briscoe and Watson.
    Josiah Cox proved that the land sold was now in possession of Freeland, except forty acres, sold to one Yalentine; that there were about one hundred and seventy acres in cultivation, when bought by Freeland, worth four dollars per acre rent. That he was not at the sale, but he understood Freeland was expected to be the purchaser.
    S. K. Montgomery proved that in his opinion there were two hundred acres cleared when. Scott died. Was present the first time the land was offered for sale; there was but one bidder besides Freeland; the sale was postponed, because enough had not been bid for it; he thinks the rent was worth six hundred dollars per annum; that Freeland admitted that he had cried his own bids, and stated he would like to become the purchaser. That all the complainants were present at the first sale ; he saw nothing tmfair, and does not believe Briscoe and Watson would permit any sale injurious to the interest of their wards.
    W. Briscoe proved that he was present at the sale. Freeland was the highest bidder at twelve dollars per acre, there were seven hundred and twelve acres in. the tract; the money was to be paid or adjusted in such manner as should be satisfactory to those concerned. At the time of the sale, Robert Scott was nineteen or twenty years of age, Agnes sixteen, William S. fifteen, Thomas B. twelve, Elizabeth M. thirteen or fourteen ; but they were of age when he settled with them as guardian ; and he subsequently became guardian of and settled with William S. Scott.
    The estate being in debt over $>6000, he thought it for the interest of the heirs to sell the land in preference to the negroes; and being interested to the extent of the dower, he agreed to let the whole be sold and take one-sixth of the proceeds of sale and pay one-sixth of the debts; he did not think the land brought a high price, or as.much as such land was estimated at in the neighborhood.
    
      The sale was open and fair; there was no combination; he was directly interested in one-sixth by marriage ; and also as guardian ; that there were two hundred acres in cultivation worth four dollars per acre for rent; he describes the improvements and thinks they were worth $1500; all have been removed by Freeland; he thinks the rent of the land for pasture, worth from one hundred and fifty to two hundred dollars per annum. There was no effort to prevent bidders, there were very few at the sale; he heard it frequently mentioned that Freeland wanted the land and would probably purchase, but could not say that prevented bidders attending; that it was generally known or believed that Freeland wanted the land.
    William Young states that he was not at the sale; he heard that the land sold for twelve dollars per acre, which he considered its value, and that was the opinion of the neighborhood.
    James Crane, proved that he was at the sale. The land was struck off to S. C. Daniel, at twelve dollars per acre. The complainants were all present at the sale, the oldest was about twenty, the other two younger; he heard of no dissatisfaction ; he was one of the commissioners to set apart dower, and divide the land, and reported that it could not be divided to the mutual advantage of the heirs. He then thought and-still thinks the land sold for a fair price. The sale was fair and public, many persons present; he neither saw or heard of any combination, and thinks there were one hundred and twenty acres cleared land, and three dollars per acre rent would be a fair price.
    Jeremiah Watson proved that he was present at the sale. The land was struck off to Smith C. Daniel. After the sale, Freeland informed him that he was the purchaser. It was sold for $8544;
    The money coming to him as guardian of two of'the heirs was paid; and has been informed by W. Briscoe and William Scott, that the balance of the money was promptly paid.
    Robert was about twenty, Agnes seventeen, William fifteen, and Thomas ten. Knows that all the heirs were acquainted with the manner and circumstances under which the sale was made except Thomas, and he may have been. Robert received his portion; Alexander Ross, who married Agnes, received her .portion.
    The estate was in debt $6661 91, and witness and Briscoe .were of opinion it would be better to sell the land than the negroes. Freeland, previous to any action regarding the sale, proposed to him and Briscoe that each of the.guardians should advance his proportion of the debts, and obviate the necessity of a sale, which they declined. Freeland paid the whole debt, and deponent gave, a note to Freeland for one third of the debt, so as-, to relieve the estate from debt before a sale. He believes .the sale was fair and open in every respect; not an attempt or suspicion of an attempt, to make the land sell for less than its value; and that all parties concerned were satisfied with it.
    The late chancellor Buckner, being a near relative of M ■Freeland the defendant, did not sit at the trial of the case ; and the¡Ho.n. John. A- Quitman, being selected by the parties to preside in.the trial, having had the cause submitted to him for final hearing, on the-pleadings and-proofs decreed that the bill be dismissed; and from this decree, the complainants appealed.
    
      Montgomery and Boyd, for appellants.
    There are only two points involved in this case.
    1, Can a trustee become a purchas.er from his co-trustees under any circumstances?
    2. Have the complainants, by their conduct, ratified and confirmed the sale ? .
    As. to the first point there can be b.ut little difficulty, The authorities all speak the same language ; from which it is clear a trustee cannot purchase, at his own sale, or at a sale made by co-trustees. And it is of no. consequence that the sale was fair, open and public, and that the price was ■ the full value of the prqperty. The court, as a matter of course, will, on the application of those interested, set the sale aside, and order a resale, the price bid-by the trustee to stand as the minimum limit. 2 ■Johns. Ch. R. 252.
    The other point stands wholly upon the testimony. For we adrqit that if the complainants, with a full knowledge of all the circumstances, received the price of the land without complaint, it is a ratification.
    On the second point, the counsel for apellants carefully reviewed and examined all the evidence in the record, and contended that it did not establish a confirmation or ratification by the heirs of the sale by their guardians; and they cited the following authorities. 4 D. & R. 543; 2 B. & 0. 824 ; 5 Esp. 102; 4 Dessaus. 60.
    
      George S. Yerger, for appellee.
    1. The evidence makes out a fair sale, no fraud, and the property went for its full value, or about it, according to the strength of the testimony. The order of the probate court fully authorized the sale, whether the act of the legislature did or not. The order of the probate court is to be presumed valid ; it is not charged that due notice was not given, nor is the record filed. The court therefore is bound to presume the judgment correct. Smith v. Dewson, 2 S. & M.
    2. Mr. Freeland was guardian for one of the minors. Mr. Watson and Mr. Briscoe were guardians for the other. No legal title was vested in them; they merely executed an authority or power conferred by the court, or the statute. One of the guardians became the purchaser. This case then involves the principle, whether the purchase of a guardian, is allowed in such case. And if it is not, whether, being merely voidable, the cestui que trusts should not apply in a reasonable time after the sale, or after age, to set it aside.
    Upon the first point it may be admitted that the law discountenances such sales, in general; and, if an application is made to set them aside in reasonable time, or before settlement, or election to take the proceeds, they will be set aside.
    - But if the minor, after full age, ratifies or affirms it, or acquiesces in it; or if he does not apply to set it aside in reasonable time, a court of equity will permit the sale to stand. See 2 Kent’s R. 231; Meigs’s R. 175; 8 Paige’s R. 89; 2 Story’s Eq. 1210, 1211; 3 Yerg. R. 80. As to what circumstances will constitute an election by the party, after full age, 2 Story’s Eq. sec. 1097, 1098.
    
      There is no question,.as a general rule, that the cestui que trust has a right to set aside the sale, if he chooses, when the trustee is the purchaser. 2 Johns. Ch. R. 260, 261, and authorities cited.
    But it is a right of election merely; they may elect to affirm the sale, or to set it aside. 10 Yes. 385; 2 Johns. Ch. Cases, 259, 261.
    The authorities are, wherever a trustee purchases at his own sale, it may be set aside, without showing any fraud. But it can only bé set aside at the option or election of the cestui que trust. Campbell v. Walker, 5 Vesey, 678, 680; Ex parte Lacy, 6 Ibid. 625; Ex parte Bennett, 10 Ibid. 381, 385, 386; 5 Madd. R. 9.
    The rule is, that the cestui que trust has a right to set aside the sale, fraud or no fraud, if he chooses to say, in any reasona•ble time, he is dissatisfied with it. 2 Johns. Ch. 261, and cases cited.
    Lord Eldon says, it is in the choice of the cestui que trust, whether he will or not, &c. &c. Cited 2 Johns. Ch. R. 263.
    Indeed, it would be prostituting the rule to dishonest purposes to permit the cestui que trust, at any distance of time, to speculate on the property, and set it aside or not, after he had elected to consider it valid.
    The sale was made in 1829. Thomas Scott, the youngest of the complainants, was the ward of William Briscoe. After the sale Mr. Freeland gave up the guardianship of his ward, and Briscoe became his guardian. Freeland paid the proceeds of his purchase, as is proved. The sale was made to pay upwards of six thousand dollars, due from the estate, or the wards. This bill is filed to set aside the sale in 1839, ten years after; and four years after Thomas Scott, the youngest, came of age. I say four years, because, although one witness says he was about ten at the time of sale, and others do not know his age, yet Briscoe, his guardian, who knew better than any other his age, says he was fifteen years old at the time of the sale. Briscoe proves further, as does some of the other witnesses, that he settled fully with all complainants, after they were of age, and they received their shares of the proceeds of the land sold to Freeland. They were all present at the sale.
    If no act had been done, their laying by four years, without applying to set aside the sale, would have prevented equity from hearing them. But they settle after full age, elect to receive the proceeds, lay by for four years, and when land rises a little, come into equity to set it aside. It will not do.
   Mr. Chief Justice Sharkey

delivered the opinion of the court.

This bill was filed by the complainants to set aside a sale of real estate, made under the following circumstances. William Scott, the ancestor of complainants, died in Claiborne county, leaving a tract of land, and also some negroes, which descended to his five children, two of whom have since died. Jeremiah Watson was appointed guardian for two of the children, William Briscoe for two, and Thomas Freeland for one. The oldest was near twenty years of age, and the youngest near fifteen. In January, 1829, the legislature passed a law authorizing the guardians to sell the land to pay the debts of the estate, in preference to the personal property. An order was accordingly obtained from the probate court for that purpose, and the land was sold, and Thomas Freeland became the purchaser. There is no objection to the regularity of the sale, nor is there any ingredient of fraud in the transaction. On the contrary the land sold for its full value, and everything was conducted fairly, and for the best interests of the wards, and the money properly applied to its legitimate purposes. Indeed, there is much in the case commendatory of the conduct of the guardians, in their efforts to relieve the estate from embarrassment, and to promote the best interests of their wards. Under this state of facts there can be but two questions; first, was the sale voidable; and second, are the complainants in a condition to set it aside; or, in other words, have they waived their right since they became of age, and thereby ratified the sale.

In regard to the first point, there is no dispute between counsel as to the law; it is consequently unnecessary to enter into a minute investigation of the subject; but as the question is for the first time directly presented, divested of all extraneous circumstances, it may not be amiss to state what is believed to be the true rule in relation to purchases by trustees of the trust estate. An inclination has been manifested ^-some of the English judges, and perhaps by-some of the courts in this country, to look into the transaction when a trustee has purchased the trust property, and to make its validity rest upon its fairness. The decided weight of authority, however, is the other way; the sale may be set aside at the option ef the cestui que trust, as a matter of course. It will be sufficient to refer to the decision of Chancellor Kent, in Davoue v. Fanning, 2 Johns. Ch. R. 252, in which that great jurist entered into a lengthy investigation of the question, by a review of all the authorities. He lays down the rule emphatically, and without qualification, “ that if a trustee, acting for others, sells an estate, and becomes himself interested in the purchase, the cestui que trust is entitled, to come here, as of course, and set aside that purchase, and have the property reexposed to sale.” The same doctrine has been recently announced by the supreme court of the United States, in the case of Michaud v. Girord, 4 How. S. C. R. 503. This is the safest rule; it removes temptation from the trustee. If he is permitted, under any circumstances, to become a purchaser of the trust estate, the deepest frauds may be cloaked under the guise of fairness, and exclude the possibility of proof. In granting relief, however, the court will order the property to be resold, and if it should not bring k higher price on the second sale, then the original sale is confirmed; or the court in its discretion may set aside the sale entirely, if necessary, and order the purchase-money to be refunded. As this sale then was clearly such a one as the heirs could have set aside on coming •of age, it remains to inquire whether they have waived their right, and elected to consider it valid.

This bill was filed on the 19th of October, 1839, ten years after the sale was made. At the time of the sale Robert, the oldest of the children, was nineteen or twenty years old; William was about fifteen, and Thomas, who was the youngest, was about twelve, according to the testimony of Briscoe, who was the guardian of Thomas. At the time this suit was instituted the oldest of the complainants must have been near thirty years of age, and the youngest twenty-two. After they became of age, their guardians settled with them, and paid to each his share of his father’s estate. The heirs were present at the sale, and have been fully cognizant of the fact ever since. There has been no express ratification of the sale, but the foregoing circumstances are relied on as showing the assent of the heirs to the purchase of Freeland. It is not necessary that thereof should be an express assent to the purchase, it is often implied 1 from circumstances, one of the strongest of which is. a failure , to take immediate steps, on coming of age, to have the sale set aside, provided the party know of it. The cestui que trust may ; elect to treat the sale as valid if he will, and such election will be implied from any unre_asonable delay in taking steps to set it aside. If he should desire to have it set aside, the law requires that at least a reasonable degree of vigilance should be adopted. To lay down any precise rule on this subject is impossible, in the nature of things; each case must be governed by its own peculiar circumstances./ Supposing these complainants to have been adults at the time of sale, the lapse of time between that and the filing of the bill would undoubtedly be regarded as a confirmation. In regard to the contract of an infant, which is voidable, Chancellor Kent says, a confirmation may be justly inferred against him after he has been of age for a reasonable time, either from his positive acts in favor of the contract, or from his tacit assent under circumstances not to/'" excuse his silence. 2 Kent’s Com. 238. With regard to the oldest of the complainants the delay has been so great as to imply an affirmance. It was his duty to have manifested ’his dissent at an earlier day, and so with the next oldest. It is not like the case of a positive bar from a statute of limitations which would only commence to run when the youngest became of age. It was competent for the elder heirs to have filed their bill before the youngest became of age, and their neglect to do so must operate against their pretensions. But even as to the youngest, there was a want of vigilance, which, under the circumstances, must operate to his prejudice.

But, in addition to the length of time which intervened from the majority of the parties to the filing of the bill, there is another circumstance entitled to even more weight. After arriving at full age they all received from their guardian the product of this sale, either in money, or, which is the same thing, in property which had been protected and saved by the money arising from the sale. The proof is, that the estate was in debt about six thousand dollars; the land sold for over eight thousand; and by the sale of the land the negroes were saved. And they received their distributive share with a full knowledge of what had been done; and at a time when they were capable of judging whether the sale had been beneficial to them or not. Such settlements are usually regarded as an affirmance of the purchase of trust property by the guardian. This must be the result. If, after coming of age, they agreed to receive, and did receive the value of the property, instead of the property itself, it was a valid and binding contract, assuming that they did so with a full knowledge of their rights. In Caplinger v. Stokes, Meigs’s R. 175, a similar settlement between a guardian and his ward, made shortly after the latter became of age, was held to vest the trust property in the guardian. This, in the language of Chancellor Kent, is a positive act in favor of the contract. It is true that the reception of a distributive share by one who has just become of age, ought not to be construed too strongly against him. It is to be viewed with great allowance, and ought not to operate to his prejudice when it is obvious that he acted without due precaution, if immediate steps are taken to correct the.matter. But when parties after such a settlement have remained passive so long, it is hard to resist the conclusion of acquiescence. As to the two oldest of these complainants, they are clearly estopped by the delay as well as by their contract. The contract they made when they became of age was a valid one, and it cannot be set aside unless the heir can make some showing that his assent to it was procured by mistake of his rights, or by the fraud or deception of the opposite party.

The decree must be affirmed.