Court Opinion

ID: 6420679
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:59:32.787261+00
Date Added: 2024-06-11T15:51:45.980013
License: Public Domain

C. Allen, J.
By the plaintiff’s averments in his bill, as amended, and by the master’s report, it appears that the consideration paid for the lot of land now in controversy was advanced by Stephen Richardson from funds in his hands, belonging to an estate of which he and the plaintiff were joint executors, and for which Richardson gave to the plaintiff his promissory note, payable to the order of said executors; and that said note has never been paid, and now remains in the hands of the plaintiff as surviving executor. The defendants are the executor of the will of Richardson and his next of kin; and, in an exception to the master’s report, they set forth that this transaction does not appear to have been assented to or ratified by any other person or persons interested in said trust estate than said co-executors; and, *296in the brief submitted in their behalf, the grounds are taken that the act of the co-executors was fraudulent, and that the plaintiff cannot have personal relief in equity, whatever may be his rights as surviving executor; that no disinterested person representing the trust estate is before the court as a party; and that the defendants should not be required to perform the nugatory act of accounting with the plaintiff, when both the plaintiff and the defendants can be again called immediately to account by the beneficiaries.
Without considering other grounds of defence, we are of opinion that the above grounds must prevail, and that the plaintiff is not entitled to the aid of a court of equity to enable him to avail himself, for his own personal benefit, of the profits arising from the purchase of the lot of land in question.
he rule is general and fundamental, that no person holding trust funds can be allowed to derive any personal gain or advantage, either directly or indirectly, from the use thereof, but he must manage them with a single eye to the advantage of the "trust estate; and, if he assumes to use them in any manner for his own benefit or in his own business, he must account for all the profits arising • from such use, if profits are made, or for the principal and interest, in case of loss. The persons interested in the trust estate have the option of taking the profits, or of taking interest. This rule is applicable to every kind of fiduciary relation: to executors, administrators, trustees, guardians, directors of corporations, and all persons who hold funds in trust for others. It is also applicable to every mode in which such trustees may either directly or indirectly seek to derive a personal gain or advantage from the use of trust funds, whether by using the same in their personal business, or by treating the same as a loan to one or more or all of themselves, either with or without security, or to their partners, or to a firm of which they are members, or otherwise. Whatever form the transaction may assume, the salutary rule must be enforced which forbids them from reaping a personal profit from the method which they adopt of investing or managing the trust estate. The cases are numerous in which these doctrines have been applied, and approved text-books contain frequent repetitions of them. It will be necessary to refer to only a few of each. Townend *297v. Townend, 1 Giff. 201, 212. Wedderburn v. Wedderburn, 22 Beav. 84, 100. Stickney v. Sewell, 1 Myl. & Cr. 8. Heatheote v. Nulme, 1 Jac. & W. 122, 131. Norris’s appeal, 71 Penn. St. 106, 125, 126. Shaler v. Trowbridge, 1 Stew. (N. J.) 595, 602. Wms. on Executors (6th Am. ed.) 1841, 1842, and notes k, m, o. Lewin on Trusts (7th ed.) 253, 254, 298, 299, 312. Perry on Trusts, §§ 127, 128, 429, 432, 454, 464.
These doctrines are applicable to the present ease. By using the funds in their hands for the purchase of real estate, the executors became responsible in their fiduciary or official capacity for all the profits which might arise from such purchase. Upon the facts alleged by the plaintiff, and urged in defence by the defendants, it is the duty of both the plaintiff and the defendants to give to the estate which furnished the purchase money the benefit of the purchase. The beneficiaries in that estate have the option to take the profits, or to take interest on the money. It does not appear that they have renounced this option, or elected to take the interest merely. Under this state of things, the plaintiff has no equitable title to a share in these profits. He can only establish such title by showing affirmatively such an election by the beneficiaries, or such acquiescence by them in the transaction as amounts to such an election. From the tenor of the defendants’ argument, it is to be presumed that they intend to make the proper appropriation of the profits of this purchase, as soon as they are advised by this court that they can safely do so. But, however this may be, where two executors have united in misusing the funds in their hands, in the purchase of land for their own benefit, and profits have arisen from such purchase, which are held by one of them, or the title to the land stands in the name of one of them, and it does not appear that the persons interested in the estate are debarred by acquiescence or otherwise from their right to avail' themselves of the advantage of the purchase, the other executor cannot maintain a bill in equity for an account, and for the payment to him of a proportionate share of the profits. Decree accordingly.