Case Name: Cox, Adm'r, etc., v. John
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1877-12
Citations: 32 Ohio St. 532
Docket Number: 
Parties: Cox, Adm’r, etc., v. John.
Judges: Wright, J., dissented from the judgment.
Reporter: Ohio State Reports, New Service
Volume: 32
Pages: 532–544

Head Matter:
Cox, Adm’r, etc., v. John.
1. It is a well settled rule in equity, that a trustee is not permitted to so manage the subject of his trust, as to make profits or gain therefrom for himself. The beneficiaries in the trust have a right to expect and require the exercise of his best judgment, care, and diligence, on their behalf, and the gains resulting therefrom inure to their sole benefit.
2. What such trustee may not do directly, he is not permitted to do through the intervention of an agent or attorney.
3. 'An administrator can not, therefore, be allowed, directly, or through his attorney, to compromise, adjust, and settle claims against the estate for which he is acting, for less than their face, and to put the difference in his own pocket.
i. And the rule is the same, whether the attorney, through whom such compromise and settlement is affected, acts for the administrator officially or personally; and whether he acts, in making such settlement, as the attorney of the administrator solely, or for him and others, with a view to their joint profit. What the administrator may not do singly, the policy of the law will not permit him to participate in doing. In either case the discounts obtained from creditors must inure to the benefit of the estate.
5. Upon final settlement of an administrator’s accounts, it is not the duty of the probate judge to provide for the payment of claims against the estate which no creditor is asserting.
6. Nor is it within the jurisdiction of the probate court, upon such final settlement, to determine the state of accounts between the administrator and the several distributees to whom any balance found in his hands may be payable. The court can only order distribution of such balance according to law, leaving the state of accounts between the parties to be inquired into when such order of distribution is sought to be enforced by the respective distributees.
Error to the Court of Common Pleas, of Hamilton couuty. Reserved in the district court.
The questions iu this case, arise upon the settlement of the final account of the plaintiff in error, as administrator of the estate of Squire J. John, in the Probate Court of Hamilton county. Numerous exceptions were filed to this account by defendants in error. The account, together with two partial accounts, previously filed by the administrator, and all the exceptions thereto, were referred by the court to Aaron R. Dutton, Esq., as a special master commissioner. The master subsequently made a full report touching all the accounts, appending thereto all the evidence taken before him on the hearing audinvestigation. Tothisreport exceptions were filed by both parties. The report shows that the claims of a large number of creditors of the estate, amounting in the aggregate to $21,000, or more, were purchased and paid for by one Richard Collins, a brother-in-law of the administrator, at an average cost of thirty-three and a third per cent, of the amount appearing to be due on them. Eor the full amount of these debts against the estate, the administrator, in his final account, claimed a credit. The master found that in the purchase of these claims, Collins was acting as the agent of the heirs of one George Cox, a deceased brother of the administrator, and that the administrator was indebted to them for the full amount of the debts so purchased, and allowed him a credit accordingly. The vouchers for the claims purchased by Collins, are numbered in the last account, 68 to 99, inclusive, also 106. To the allowance of these vouchers by the master, the defendants in error excepted. This exception was numbered 15, under article 1. The court, upon hearing, “ordered that said report and findings by said master commissioner Dutton, be confirmed, and all the exceptions overruled, excepting the fifteenth exception under article one, and the third exception under article two, filed by the heirs, as to which the court found error in said report, and ordered that the same be reversed in this, that the master has allowed said adminis trator credit in his account for the full amount of the claims specified in said fifteenth exception, whereas all the the said claims were compounded and purchased, at a great discount, by Richard H. Collins, as found in said master’s report, while retained and acting as attorney for said administrator, in settling said estate, and the compounding thereof, accrued to the benefit of said estate, and the administrator should have been allowed and credited in his account the sum or amount actually paid for said claims respectively, and no more.” The court then re-adjusted the accounts, crediting the amount paid by Collins for said claims, aud no more, and bringing the administrator in debt to the estate in the sum of $6,629.81, on October 26, 1866, and then ordered the administrator to distribute to the widow and children, said sum with interest.
• From this order and judgment the administrator appealed.
At the June term, 1870, of the common pleas, a like order and judgment was entered. It sustains the exception to article one, of the exceptions of the heirs to the master’s report, by ordering “ that the report and findings of said master commissioner are erroneous in this, that the master has allowed said administrator credit for the full amount of the claims against said estate, specified in the fifteenth exception, article one, filed by said heirs of S. J. John, whereas, by law, said administrator was entitled to credit in his accounts for the sum or amount actually paid for the said claims respectively, and for no more; the court finding that the said claims were compounded and purchased by Richard II. Collins, while l’etained and acting as attorney for the said administrator in the settlement of said estate, and at a great discount, as found in said master’s report, and that said discount must be held to inure to the benefit of said estate.” The court then re-adjust the account, and find the administrator in debt to the estate in a balance of $6,629.91, with interest, thereon from Oct. 26, 1866, which balance of $6,629,91, with interest as aforesaid, the said administrator is ordered to distribute and pay to the widow arid children of the said Squire J. John, according to their respective shares in law.
The court then ordered, “that the master’s report, after being thus corrected, be and hereby is confirmed.”
To all the findings, rulings, and judgment of the court, Edward Cox the administrator excepted — and moved the court for a new trial, but the court overruled the motion, to which he also excepted.
lie then-presented a bill of exceptions containing all the testimony in the ease, accounts and vouchers, etc., in evidence on the hearing and trial, which was approved, signed and sealed, and made part of the record.
The case was taken to the district court by petition in error.
The district court reserved the cause and all questions arising in the same, to the supreme court.
The material facts shown by the testimony, and other parts of the record, are stated in the opinion of the court.'
C. D. Coffin, with Charles. L. Mitchell, for plaintiff in error:
As to the relation of attorney and client, in regard to purchases by the attorney for his client. 18 Ves. 313; Holman v. Loynes, 4 De Gex. M. & G. 281; Edmons v. Meyrick, 2 Hare, 60. And as to his disability to purchase. Exparte Lacey, 6 Ves. 626; Crane v. Allen, 2 Dow. 289; Naylor v. Winch, 1 Simon & Stewart, 555; Farnam v. Brooks, 9 Pick. 232. As to what must be' done before the client can claim the purchase. Galbreath v. Elder, 8 Watt. 95; Wade v. Pettibone, 11 Ohio, 57, 60, 61; Downey v. Garrard, 3 Grant’s Cases, 64; Henry v. Raimer, 25 Penn. St. 354; Clevinger v. Raiman, 3 S. & W. 486, 493; Smith v. Brotherton, 32 Penn. St. 461, 469. On the relation of an attorney of an administrator to the widow and children of the decedent, see Salladi’s appeal, 36 Penn. St. 12 (12 Casey), 429.
Rufus King, and Lawrence Maxwell, Jr., for the widow and heirs:
I. It is well settled that an administrator can not buy claims at a discount, for his own benefit. A trustee’s entire services are due to his trust.
Nor can he be jointly interested with others in such purchase. Mitchum’s Heirs v. Mitchum’s Adm’rs, 3 Dana (Ky.), 260, 265, 266; Brackenridge v. Holland, 2 Blackf. (Ind.), 377; Fulton v. Whitney (N. Y. C. A.), 2 Law and Eq. 713.
Nor agree to accept a benefit from the purchaser. Bailey v. Watkins, Sudgen Law of Property, 726.
These rules of equity are epitomized in our statute. S. & C. 598, § 163.
The evidence proves conclusively that Collins’ purchases were made on behalf of the administrator. Whether it was wholly or in part with money lent to the administrator by others is immaterial.
And it is also immaterial, under the authorities cited, whether the purchases were for the administrator’s sole benefit, or whether he was only jointly interested therein with Collins and the heirs of Geo. Cox, or to what extent he was interested.
II. But even if it were true, as claimed by the administrator, that he had no interest whatever in the purchase of these claims; but that it was the other heirs of George Cox, acting solely on their own account, and for their own benefit, who bought them, the discount must nevertheless inure to the estate.
1. Because they bought through the illegal agency of the attorney and administrator of the estate.
2. Because one of those heirs was the wife of the attorney of the estate, and all of them were the brothers and sisters of the administrator.
1. The attorney of an estate can no more buy claims than the administrator. Ex parte James, 8 Ves. 346; Wade v. Pettibone, 11 Ohio, 57-59; Stockton v. Ford, 11 How. (U. S.), 232, 247; Story on Agency, § 211; Reed v. Norris, 2 Myl. & Craig, 374.
And what neither can do for himself, he can not do as agent for others, because as agent for others he would have the same conflicting interest with his duties to the estate, as if acting for himself; at least, the distinction between the degree of interest he would have in the different cases is “ to thin to form a safe rule of justice.” Fx parte Bennett, 10 Ves. 399, 381, 382, 384, 393-400; Hawley v. Cramer, 4 Cowen, 718-735; Reed v. Warner, 5 Paige, 650-656; Piatt v. Longworth, 27 Ohio St. 159.
The administrator certainly participated in the negotiations for the purchase of these debts. If he were not acting as principal, the only alternative is that he was acting as agent for the heirs of George Cox.
Collins’ employment to collect debts was sufficient to constitute him attorney for the estate. It was not necessary that he should have been employed to bring or defend suits. In the matter of Aitkin, 4 B. & Aid. 47.
But he also acted as counselor, and gave advice as to closing the estate. His bill for $1,200 includes “ advice generally.”
2. The rule, which prohibits an administrator or attorney from being interested in the purchase of claims against the estate, is equally applicable to a purchase by the wife, or the brothers and sisters of either. Devoue v. Fanning, 2 Johns, ch. 252; Riddle v. Boll, 24 Ohio St. 572; Piatt v. Longworth, 27 Ohio St. 160; Mitchum’s Heirs v. Mitchum’s Adm’rs, 3 Dana (Ky.), 266; Dundas’ Appeals, 64 Penn. St. 325-332.
III. As to the balance alleged to be due to the estate of George Cox, it is to be observed that no such claim is, or, so far as the testimony shows, ever has been, set up by his administrator. It was brought forward, collaterally, by Edward Cox, the administrator of John. It was sought to obtain credit on his account for it, but it was overruled by the master, expressly on the ground that it was not receipted for, nor transferred nor assigned by the administrator of George Cox to E. Cox, the administrator of John. On his own showing, therefore, the master was unwarranted in proceeding to say that it is still a debt of John’s estate to that of George Cox.
The authority of the probate court is limited to auditing the administrator’s accounts. (1 S. & C. 599, § 168.) It has no jurisdiction to adjudicate upon alleged debts of the estate.
Nor was any such jurisdiction invoked by the administrator of George Cox. There is no evidence or pretense that he authorized or presented any claim against John’s estate. Indeed, upon the evidence, it is clear that the administrator of John has been credited in his accounts with the payment of all claims ever held by George Cox against John.
IY. The probate court, whose jurisdiction “to settle the accounts of executors and administrators, and to order the distribution of estates” (S. & C. 1212, § 2), was alone invoked below, had no power, in this proceeding, to investigate or determine the alleged indebtedness of Mrs. John to the administrator.
The only order the court had power to make, was a general direction to distribute the funds remaining in his hands according to law. Swearingen v. Morris, 14 Ohio St. 432; McLaughlin v. McLaughlin, 4 Ohio St. 511.
This record does not disclose, because the probate court had no jurisdiction in the case to investigate, the true inwardness of the alleged transaction between the widow and the administrator, by which it is now falsely pretended that the stock was turned over to her and retransferred to him as her agent.
If she incurred a liability to the administrator, which is still outstanding, he can enforce it by an action, or by way of set off, when she sues to recover upon the order of distribution. (S. & C. 620, § 4.)

Opinion:
Scott, J.
The controversy in this case is now limited to the findings and rulings of the court below, on the exceptions taken to the report of the master in relation to the final account of the plaintiff' in error, as administrator of the estate of S. J. John. The main question in' the case is, Did the court below err, to the prejudice of plaintiff in er ror, in finding, from the vouchers and testimony in the case, and from the facts found by the master, that the claims against the estate, which were purchased for about one-third of their nominal amount, " were so compounded and purchased by Richard IT. Collins, while retained and acting as attorney for said administrator, in the settlement of said estate;" and in holding that, "bylaw, said administrator was entitled to credit in his accounts for the sum or amount actually paid for the said claims respectively, and for no more ? " And was the final order and judgment, made in accordance with such finding, erroneous ?
These questions present mainly, if not solely, an issue of fact. For we do not understand that there is any substantial disagreement between counsel, as to the law governing this main subject of contest. "We do not understand counsel as questioning the soundness of the rule, well settled in equity, that á trustee is not permitted to manage the subject of his trust so as to make profits or gain therefrom for himself. The beneficiaries in the trust have a right to' expect and require the exercise of his best judgment, care, and diligence on their behalf, and the gains resulting therefrom inure to their sole benefit. An administrator can not, therefore, be allowed to compromise, adjust, and settle claims agaiust the estate for which he is acting, for less than their face, and put the difference in his own- pocket. And it is equally clear, that what he can not do directly, he will not be allowed to do through his attorney or agent. The maxim, " qui facit per alium, facit per se," is, at least, as efficacious and forcible in equity, as at law.
If, in purchasing or satisfying these claims, Collins was retained by, and was acting as attorney for, the administrator, we think it immaterial whether, as between themselves, it was understood that he was retained by the administrator personally or officially. In either case, so long as the trust continues, such purchase is the act of the trustee, and must inure to the benefit of the cestuis que trust, and not of the administrator personally. Nor does it make any difference whether, in this business, Collins was employed solely by the administrator, or by him and others, with a view to their joint profit, For, what he may not do singly, the policy of the law will not permit him to participate in doing. In matters pertaining to his trust, he must be the servant solely of the beneficiaries. These principles are so well settled as to require no citation of authorities in their support. Nor do we understand them to be drawn directly in question by the able counsel who represent the plaintiff in error.
The main question, then, is one of fact: Was Richard Collins, in the purchase or adjustment of the claims in question, acting as the agent or attorney of the plaintiff in error, or was he acting solely for others ?
The following facts, bearing more or less directly on this question, appear from the record :
Circumstances, which to a great extent were beyond the control of the plaintiff in error, have rendered his admin-' istration of the estate of S. J. John an unfortunate one for himself. The assets of the estate were not administered according to law. A large portion of them, amounting at the appraisement to some $47,000, or more, were, by an arrangement deemed prudent at the time, taken by the widow at the appraisement, for which he took her note without security. She turned this property over to him to be disposed of otherwise than by public sale. He was liable for its appraised value, and lost largely by the operation.
His brother, George Cox, was one of the sureties on his administration bond. Before the purchase of the claims in controversy, George Cox died intestate, leaving considerable property. His brothers and sisters were his heirs ; of whom Edward Cox, the plaintiff in error, was one, and the wife of Richard Collins was another, There were several other brothers and sisters, and the testimony tends to show that they were apprehensive of a liability devolving on them in consequence of the suretyship of their brother, George, for the faithful administration of the John estate; and that all the heirs of George Cox, including Edward Cox, the present plaintiff, allowed and authorized Collins to use, for the purchase of the claims in dispute, moneys which came to his hands from the estate of George Cox, and which were the joint property of his heirs.
In the administrator's account, the disputed claims are all stated in the names of the original creditors, and not as payments made to Collins, as their assignee.
The record also shows clearly that, for several years prior to the settlement of these claims with the creditors, Collins had been acting as the attorney of plaintiff in error, in endeavoring to collect and adjust doubtful claims in favor of the John estate, and in defending his partial settlement accounts against exceptions taken thereto by the widow and heirs, and regarded himself as general advisory counsel for the administrator. Among the last vouchers in the administration account, is a receipted account of Collins for $1,200, as fees " for his efforts to collect or compromise bad debts, defending ads. widow and heirs, and advice generally."
When Collins first commenced getting in claims of creditors, the business was transacted in the name of the adminstrator, and receipts were taken as for payments made by him. Subsequently, the formal mode of operation was so far changed, as to substitute for a receipt a transfer of the claim of the creditor, without recourse.
The claim of one creditor was adjusted by Collins, by an agreement which seems to have contemplated and provided for the conveyance to the creditor of certain real estate, of which John died seized. This arrangement seems to have been carried out without objection by the administrator.
There is much testimony in the case, both by creditors and attorneys for creditors, with whom settlements were made by Collins, tending to prove that, in many cases, favorable terms of settlement and large discounts were obtained from creditors, by the representations of Collins that the John estate was insolvent, and that he was acting in the premises on behalf and in the interest of the administrator, the widow, and the heirs of S. J. John.
It) one case, an attorney representing a creditor's claim, wrote to-the administrator, demanding payment. In response to this letter, he was, shortly afterward, visited by Collins, on whose representations a very favorable settlement and large discount from the face of the claim were obtained from the attorney acting for his client.
It is true Collins testifies: " I did not act as the attorney of the administrator in the purchase of these claims, but as the agent and attorney of the heirs of George Cox, using their money for that purpose." But, it must be remembered that the administrator himself was one of those heirs. Indeed, he was the one most deeply interested in the settlement of John's estate. Iiis liability was primary ; that of the other heirs of George Cox was only secondary.
And as to the means, by the use of which Mr. Collins was enabled to satisfy and extinguish the claims of creditors, he himself testifies that he had, in his hands, more than $15,000 of their money, all of which he !£ was authorized by them, and directed to use, if necessary, in purchasing the outstanding claims against S. J. John's estate." This money was mainly the proceeds of two farms and certain city property sold by him as the agent and attorney of the heirs of George Cox. The claims, then, were bought and paid for with money belonging jointly to Edward Cox and his surviving brothers and sisters; in which each had an equal interest. And if, in the purchase of the claims, Collius was acting as the agent of the heirs of George Cox, then Edward Cox was one of his principals, and contributed an equal share toward furnishing the means for that purpose.
These facts, testified to by Mr. Collins, who was not an unwilling witness for the administrator, negative the finding of the master, that Edward Cox contributed no part of the means with which the claims in question were purchased.
It is also shown, by the record, that the power of attorney whereby Collins was authorized to act for the heirs of George Cox, in renting, leasing, and selling their real
4 estate;' and the agreement by which his fees for services were fixed, were both executed by Edward Cox as well as by his brothers and sisters.
We think the evidence in the case fully justifies the finding, thait Richard Collins, in the purchase of these claims, was acting as the attorney or agent of the plaintiff in error. And though others may have united with the administrator, in authorizing these- purchases for his benefit, they must inure to the benefit of the estate'of S. J. John.
Whether the same conclusion of law would not result from the relations which Collins, the purchaser, sustained toward the estate of John, we have not thought it necesto determine.
In addition to this main subject of controversy, it is claimed, by plaintiff'in error, that the court below erred in not directing payment, before distribution, of a sum which, it was claimed, was found, by the master's report, to be due from the estate of S. J. John to the estate of George Cox; and also in ordering distribution to be made to the widow of Mr. John, with the children, when she was indebted to the administrator upon the note which he took from her for the stock of furniture at the valuation made by the appraisers.
The master, in his report, credits the administrator with the payment of a portion of a claim in favor of the estate of George Cox, against the estate of S. J. John. He refused to credit him with the residue of the claim, on the ground that there was no voucher for its payment, and it had not been transferred to him. And he incidentally adds, as a deduction, that the residue of the claim is still a debt of John's estate to that of George Cox. But it was not the duty of the master,-nor was it-within his province, to determine the validity of unpaid claims against the estate of John. Nor had the probate court jurisdiction to determine controversies between alleged creditors and the administrator. And, if it had, the exercise of such jurisdiction does not appear to have been invoked by the administrator of the estate of George Cox. We think it is no part of the duty of a probate court, upon final settlement of tbe administration account, to provide, by its final order and judgment, for the payment of claims which no creditor is asserting.
Nor had the probate court jurisdiction, on settlement of the administrator's account, to inquire whether Mrs. John, or any other distributee of the estate, was indebted to the administrator, or to ascertain the amount of such indebtedness, and provide for its payment in whole or in part.
The settlement made by and before the probate court, had relation only to accounts between the administrator and the estate; and not to the state of accounts between him and the several distributees.
If the probate court found a balance in the hands of the administrator, it could only order its distribution according to law. When the widow shall seek to enforce such order of distribution, by proceedings in the probate court, or by action in the court of common pleas, it will, doubtless, be competent for the administrator to set off' against her claim such liquidated demands as he may hold against her.
We think the judgment of the court of common pleas must be affirmed.
Wright, J., dissented from the judgment.