Case ID: sc-eq_25/html/0165-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Ouriam.\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Margaret Zimmerman, by next friend, vs. John P. Harmon and David Zimmerman.
    
    If a trustee purchase the trust property in good faith, and pay for it a full price, it is nevertheless optional with. the cestui que trust whether the sale shall stand. A trustee so purchasing a slave, and afterwards selling Mm at an advanced price, ordered to account for the hire of the slave, and for the advanced price.
    
      Before WakdIiAw, J. at Spartanburg, June, 1851.
    WARDLAw, Cli. David Zimmerman, then of Orangeburg district, and husband of the plaintiff, in February, 1839, conveyed by deed to Conrad Kennerly, three slaves and their future increase, namely : Henry, about 12 years old ; Jenny, about 10 years old; and Lewis, about 8 years old; “ in trust for the sole and separate use, benefit and behoof of my (his) wife, Margaret, notwithstanding her coverture, for and during the term of her natural life, and after her death, then for the use, benefit and behoof of her lawful issue, as well that she now has, as those she may hereafter have, share and share alike, or of the ■ survivors or survivor of them.” After the execution of this deed, D. Zimmerman, with his family and slaves, removed to Spartanburg district, and he there puchased a tract of land from one Kalph Smith, and mortgaged the land to secure the purchase money. Smith afterwards obtained judgment at law against Zimmerman, for the price of the land, and in execution of his judgment levied on Lewis, one of the slaves named in the deed. Defendant, Harmon, was substituted as trustee, in said deed, in place of Kennerly, by certain proceedings in equity, in Spartanburg district, at June Term, 1843. Harmon, Zimmerman and wife, September 4, 1843, filed their bill against Smith, to restrain him from enforcing his judgment against the trust estate; and at June Term, 1844, it was decreed, that such injunction should be extended, until the mortgaged land should be sold, and that if the proceeds of sale were insufficient to pay his debt, Smith might proceed for the balance on his levy. The land was accordingly sold, but did not bring money enough, by about $400 to satisfy Smith’s judgment. Thereupon it was agreed between Harmon and Zimmerman, that the former should take the slave, Henry, at the price of $400, and pay that sum to Smith; this was done, and a bill of sale executed from Zimmerman to Harmon, July 26, 1844. Harmon retained the slave Henry in his possession until December, 1850, when he sold him to one who has removed him from the State, for the price of $700. The value of Henry’s services, while in Harmon’s possession, was about double the interest on the money advanced by Harmon.
    Margaret Zimmerman, who sues in this behalf by her next friend, Ransom L. Kirby, files this bill to compel her trustee, Harmon, to account for the profit he has made on the sale of Henry, and for the hire and wages of the slave; and for the substitution of Kirby, as her trustee. The bill alleges that the slave was not sold to Harmon, but was delivered to him as a pledge to secure the repayment of the $40,0 advanced to Smith.
    The answer of D. Zimmerman, is a mere echo of the bill. The answer of Harmon insists, that he purchased the slave in good faith, for the preservation of the rest of the trust estate, at a full price; and that as he ran all the risks from the death of the slave and other casualties, he should be allowed the advantages which have accrued from his bargain. The answer assents to the change of trustee.
    My judgment, from the evidence, is, that Harmon took the slave as a purchase, and not as a pledge, — that he paid a full price for him, — and that his conduct in the transaction was without intentional bad faith.
    Nevertheless, according to the rules of Courts of Equity, founded on general policy, and so prescribed to avoid the necessity of scrutiny into the fairness of every particular transaction of the kind, the purchase of this slave, by the trustee, cannot stand. If a trustee, strictly honest, buy for himself the trust property from his beneficiary, and then sell it for more money, the character of trustee remains fixed upon him, and he must account for the profits of bis management of tbe property. It is not indispensable, in order to avoid snob purchase, that advantage to tbe trustee shall be proved. Tbe infirmity of tbe contract grows out of tbe fiduciary relation between tbe parties. ' To guard against tbe hazard of abuse, and to keep tbe .trustee from temptation, tbe rule allows tbe beneficiary, at bis own option, to set aside tbe sale, whether made bona fide or not: “So a trustee will not be permitted to obtain any profit or advantage to himself in managing tbe concerns of tbe cestui que trust, but whatever benefits or profits are obtained, will belong exclusively to tbe cestui que trust. In short, it may be laid down as a general rule, that a trustee is bound not to do anything which can plape him in a position inconsistent with tbe interests of tbe trust, or which has a tendency to interfere with tbe discharge of bis duty.” Story Eq. § 321, 322. So that if tbe plaintiff here had been sui juris, and bad, herself, sold the slave to her trustee, it would be at her option whether tbe sale should stand; and her title to rehef is strengthened by tbe considerations, that she was under tbe disability of coverture, and that the sale was effected by tbe confederacy of her husband and trustee.
    It is ordered and decreed, that the defendant, Harmon, account for tbe hire of tbe slave Henry, from July 26, 1844, to December, 1850: and for tbe sum of $700, with interest from tbe latter date, and that he be allowed credit for $400, with interest from tbe former date.
    It is also ordered, that it be referred to tbe commissioner of this Court, to take tbe account; and to enquire and report as to tbe fitness of tbe trustee proposed to. be substituted, and as to tbe amount and nature of security that should be given.
    Also ordered, that defendant, Harmon, pay tbe costs of this suit, except tbe costs of David Zimmerman, which must be paid by himself, and tbe costs of substitution of trustee, which must be paid from tbe trust estate.
    Tbe defendant, J. P. Harmon, appealed and moved this Court to reverse tbe circuit decree, on tbe grounds :
    
      1. Because, from tbe case made, tbe deed to Kennerly was void as to tbe creditors of D. Zimmerman, wbo sold tbe boy in dispute to Harmon at a full, fan price, to save tbe remainder of tbe trust property.
    2. Because, as tbe trust property was subject to be sold by tbe sheriff at a sacrifice, tbe purchase by defendant was a benefit to tbe trust estate, and ought to be sustained.
    3. Because tbe decree makes tbe trustee pay costs out of bis own funds, notwithstanding it is most evident that tbe trust estate is greatly benefitted by tbe course be pursued, and that be acted in good faith.
    4. Because the decree is not sustained by law or tbe justice and equity of tbe case.
    
      Bobo, for appellant.
    -, contra.
   Per Ouriam.

This Court concurs in tbe decree of tbe Chancellor : which is hereby affirmed, and tbe appeal dismissed.

JoiiNSTON, DüNKiN, UaRGAN and WaRduaw, CO., concurring.

Appeal dismissed.