Court Opinion

ID: 6420232
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:59:12.934724+00
Date Added: 2024-06-11T15:51:45.073722
License: Public Domain

Soule, J.
The general rule is familiar, that a trustee will not be permitted to make a profit out of the trust property; and that *383if he purchases it, even at a public auction, he will hold it for the benefit of the cestui que trust, and, if any profit is made upon it, he must account for it as trustee. Perry on Trusts, § 427. This rule applies to cases where one deals with property as agent for another, and to all those cases in which confidence is reposed, and one has it in his power, in a secret manner, for his own advantage to sacrifice the interests which have been entrusted to him. Story Eq. Jur. § 323. In all such cases, the cestui que trust has his election to avoid the transaction which was intended to benefit the trustee, and to treat the subject matter of the trust as if no change had been made in its situation, so long as the trustee has not disposed of the property to a bona fide holder for value. Wyman v. Hooper, 2 Gray, 141.
The application of this principle to the case at bar is plain. The defendant Dexter was acting for himself and his former partner, and the assignee in bankruptcy of his partner, in closing up the affairs of the partnership. When he undertook to sell the interest of the partnership in the Ocean Rover and its outfits and catchings, he had no right, as against the other parties in interest, to make a secret arrangement by which a stranger should purchase the interest for him. And when the purchase was made in accordance with that secret arrangement, and the interest, after being conveyed to the purchaser, was conveyed by him to Dexter in pursuance of the secret arrangement, Dexter held it for the benefit of the partnership, and not for his personal benefit.
We have assumed, in what we have said, that such secret arrangement was made and acted on, because we are of opinion that the agreed facts and evidence call for a finding to that effect. Such finding is a sufficient foundation for a decree against the defendants.
It has already been decided that, inasmuch as the debts which the plaintiff owed when he went into insolvency have been paid, and his assignee in insolvency disclaims all interest in the subject matter of the suit, and assents to the maintenance of the bill, the plaintiff, if any one, is entitled to the relief asked for. Jones v. Dexter, 125 Mass. 469. The result is, that the decree appealed from must be

Affirmed.