Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1885-10-10


in various corporations. II is true they con
timed TO be virtual Directors Of these corpora
tons as they and Cotton had previously been.
But this no longer depended upon any conf
Dental relations with the holders of colton,s
stock. There was nothing to prevent Mrs. col
ton from engaging in con, ~ business or
bind her to their schemes in any otrre,--ay than
any stockholder would be bound by the action
OF the Directors. In other words they had no
other power over her affairs than as Directors.
The previous relations with Cotton did not af-
feet the question. They and Cotton had no
vested interest in any new projects not yet be-
gun. The association was for the purpose of
enriehing themselves through the corporations.
Whatever they had was held stockholders.
The mere schemes she had no lot in. The asso-
citation had no properly. They had further
projects, schemes and designs There was no
succession as 10 those. The survivors as virtual
Directors owed duties to the corporations. The
value of the stock and bonds belonging to some
of these corporations and TO Mrs. tolton indi-
yidually depended largely upon the completion
of some of these schemes, or at least their par
tial completion She could not be called upon to
contribute 20 any of these; nor do see how she
could require them TO incur risks and eXpend
their means and energies 10 that end. At least
beyond the performance OF contracts which had
become obligatory upon some OF the corpora
lions they controlled They were parties to
contract, the sole purpose of which was TO Sc
cure the united efforts of all in the interests of
sundry corporations in which they all had
stock One OF them died. Evidently there is no
consideration for the further service of the sur
yivors, aud no obligations except such as rests
ON all Directors Otherwise il would seem that
Colton's estate would be bound for further
schemes TO advance the system they had partly
completed. This Mrs. Cotton did distinctly de-
cline 10 contribute to.
| PLAINTIFF DID NOT TREAT DEFENDANTS AS
TRUSTEES.
| There were not then after Colton's death
any further active duties as trustee due from
| defendant to the estate of Cotton They had
however, been associated with him in many
| important enterprises in which they had prac-
| tically acquired much valuable property. In
| this way they may have acquired knowledge
| as to the value of the property, and they in
inct had great power over the assets of the es-
tate as virtual Directors of these numerous cor
| porations The association between themselves
was kept up, by means ofwhich they continued
TO direct the policy OF all the roads as they and
| Cotton had previously DONE Considering these
| facts and that the fiduciary relation, such as il
| was between the defendants and Cotton had
| but just been terminated by his death, we ap-
| preached the question as to what duties the de
| PENDANTS were burdened with in their dealings
with the plaintiff and how they discharged
| them. 1t must be remembered here that il is
! not claimed that the transaction was had under
| the influence of any trust relation. The plain
tiff did not rely upon the defendants believing
| that they were her trustees. and as such owed
| her any duties whatever.
! She understood that she was dealing with
| them as strangers, and that she must protect
herself 1t is claimed that the aSSailed contract
| must be set aside because she dealt in ignor-
anee OF her rights as beneficiary OF a trust. Her
counsel says this voluminous record contains
| no evidence that she was aware of this fact OF
that the defendants ever dreamed that they had
! no right, legal or moral, to deal with her al
| arms length and as adversaries, and he claims
| that the concealment from her of the facts con
shutting the trust relation is one of the most
pregnant facts i'll the case. And beyond all this
Mrs. Cotton, as witness, states that she did not
| deal or settle with perfect trust and confidence
| That at the time she saw no Justice in the trans.
| action. That her heart rebelled. That she be-
| iieyes the defendants made the charges, know
| ing them to be false. That they manipulated
their books to sustain the charges and were
altogether unworthy of any trust or confidence
| and, in effect she said that she believed that
the settlement was robbery, which, under the
| circumstances, she was powerless to prevent
| Ofcourse, this at once takes out of the case al
claim that the settlement was brought about By
any personal confidence in the defendants
| She did not rely upon them.
| If this was an issue in the case and there wa.
| a presumption against the defendants, and tn,
| presumption was disputable one it could no
be more completely disproyed If the relation
| nership, or be considered such, it would no
change this result. At Coltons death the rela
ton was dissolved, and there survived to tn,
defendants no power as partners, because Their
was left i'll their hands no assets of the firm t
be administered. 1t is therefore, for the pun
poses this case utterly immaterial whether i
be denominated partnership or not.
SURVIVING PARTNERS ARE TRUSTEES OF DE-
CEAsED's INTEREST.
The conclusion to be arrived at and as to tn
obligations which rested upon the defendants a
late partners or trustees of Cotton, may depent
much upon the construction given to the pro
visions of the code in relation to trusts. | un
derstand that the death of partner dissolve
the relations, except for the purposes of liquida
ton and settlements. Perhaps this might in
| yOlve in some cases performance of incOmplet
contracts Now, there never was a time Whel
the death of any one of the partners, if the
were partners, would have left to the survivor
property OF the partnership or power over III
| estate OF the deceased partner such as goes to
| surviving partner. This would go far in IN
| opinion, TO show that the relation was not tina
of partners, but Independently of that. this fac
must affect very considerably the relation of tn
survivors The surviving partners are trustee
with reference to the interest of the deceased i
| the firm because the property is left i'll thei
| hands and a power with reference to it survive
to them. They have the property and tn
power, ana hence the duties and the correlativ
rights OF the ceStW que trust. There being her
no properly or power as survivors, the relation
and duties, it would seem, would also cease
all, anyway, except such as frequently Srryiv
the actual reation--the duty of making full
disclosure, and to refrain from taking any ad
vantage of the position to Cypress or influenc
| the beneficiary OF the late trust.
Plaintiff 5 counsel, or some of them, conteni
| that the code has made quite a material chang
in the law of trusts, or ut least i'll the applica
ton of the rules heretofore recognized and en-
| forced by Courts of equity upon the subject. A
l understand, it is contended that wheneve
circumstances exist which, under our code
would constitute what is there designated tn
! trust relation, the law fixes upon the trustee
definite set of duties, which are the same upol
all trustees or all who, by the code, are declares
| TO be trustees, however various the obligation
may be which the parties have knOwingl
undertaken or the character or degree of conf
dence by which the reduction was created. !
there is any foundation for this claim, it is
very important question; for ii is also contendet
that all who accept any degree of confidence
from another are trustees within the meaning
of the code. That all those who were siInpl
cause trustees in the decisions by analogy, ant
became to some extent the law, If the trust re
lation was applied to them, are by our cod
placed upon the same footing as technical trlls
tees. This will include innumerable cases il
which transactions were had partly in cOnse
quence of known reliance of one party upol
the other or upon some statement made in tn
negotiations Counsel has cited one instance O
the creation of the relation by actual relianc
OF one party upon the other.
ILLOGICAL EXTENSION OF THE THEORY OF TRUST
A country dealer goes to wholesale merchan
to purchase goods, and, being asked in regar
to his solveucy, undertakes to state his financia
condition, and at once the wholesale merchan
becomes his ceStui que trust, and, although coun
sci does not expressly claim this, it would follow
from his position that if now the retail merchan
purchase, he trades under all the obstruction
! which are placed upon the dealing of technica
trustees with their benefeiaries. He must pre-
tect the confiding wholesale dealer from seliin
too cheap. and If he does not himself know
must DC uillgeuI 10 ma out, JndI ne may Inform
his beneficiary of all matter material to tn
transaction. He must do more; he must dis
close his real motives i'll seeking to trade an,
this includes his future policy in reference t
the goods, and if il turns ont that he had. O
thought he had. some special opportunities O
disposing of some of the goods, which he di
not disclose, the wholesale merchant may a
his option, rescind the sale or claim an account
ing of the profits made, and then the retail mel
chant is presumed, without proof, to have OF
tanned the goods for an insufficient consider
alton and by the use of undue influence.
| The Code, il is said, defines a trust as a rela
ton, and declares that the relation exists when
ever one voluntarily assumes relation of pei
sonal confidence WI i another. The Code the
defines the obliga;. pns of trustees, which, il
contended, apply their full length an,
breadth, and therefore, of course. to all case
alike, TO every case IN which lhcre is n reposi
ton of confidence d.! any character or degree
The extent of the supposed charge in the appli
cation of the law VIII be better appreciate
| from the remarks of the late Professor Pomero
| upon the Code provisions in regard to trust:
He says:
The essential conception of Il trust as a wor
of legal nomenc. iure, and as defined by til
text writers OF the highest authority assume
not only confidential relation between tw
persons, but also some specific thing land
ehattel, MONEYS the subject matters of sucl
| relation, and to coeXisting estates in the sam
subject matter; the one iegal-held by the truS
tees; the other equitable, held by the benef
| ciary. All the constructive rules of law and o
equity concerning trusts are based upon thes
essential elements of the peculiar legal conceT
tion-namely, the confidential relation, tn
subject matter and the two coexisting estate