Court Opinion

ID: 6313219
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:18:32.345054+00
Date Added: 2024-06-11T08:59:09.060543
License: Public Domain

*409The opinion of the Court was delivered by
Rogers, J.
When the administration of a trust is vested in co-trustees, they all form but one collective trustee. They must, therefore, execute the duties of the office in their joint capacity. Thus a receipt for money or a certificate of bankruptcy, &c. must receive the joint signature of the whole body; for the power, interest and authority of co-trustees in the subject-matter of the trust being equal and undivided, they cannot like executors act separately, but all must join. Lewin on Trusts 265, (24 Law Lib.); Willis on Trusts 136, (10 Law Lib.); Ex parte Rigby, (19 Vez. 463). And this principle enters into all cases depending on the discretion and judgment of the trustees in contradistinction to acts of a mere ministerial nature. The former requires the concurrence of all the trustees; the latter may be performed by one. The contract in question is without doubt one of the former description, and consequently comes within the general principle. And the only doubt is whether there are circumstances in the case which make it an exception. It may be admitted on the authority of Osborne’s Case, (5 Whart. 267), that if the contract had been made by both the assignees, it would have bound the fund; but the question is whether one of the trustees without any authority from his co-trustee, can bind the estate. And that this cannot be appears from the principles above stated, unless there are some circumstances attending the case which make it an exception from the general rule. The validity of the contract is put on the ground of necessity and the benefit which the fund derived from the agreement. It is said that the act of the assignee in this instance was not so much in furtherance of the trust as to prevent its utter frustration by a sacrifice of the property. The exercise of such a power is inherent in each of the trustees from necessity, and being for the advantage of the cestui que trust, the assent of the co-trustee would, if necessary, be presumed, in order to sustain a procedure essential to the continued existence of the trust, at least in the absence of an express negative, on the ground that it is the duty of each of the trustees to do everything proper and necessary to the promotion of the interest of the cestui que trust, and equity in the absence of proof to the contrary will take it for granted he has so done.
It is not my intention to deny the justice of the abstract principles asserted by the court, but it seems to me they do not apply, because there is no room for the presumption of any acquiescence or consent to the contract; for the proof is that the co-trustee was not present when the agreement was made, nor has any consent, either previous or subsequent, been shown, nor is any pretended to have existed. It is the naked case of one of two trustees making an important contract without any authority whatever from the other to act for him. Nor do we perceive any necessity whatever for the agreement. The co-trustee was in the immediate vicinity *410and could have been consulted without any detriment whatever to the interests of the trust. It is therefore unlike the case to which it has been assimilated in the argument, of a fire where one of two trustees makes a contract in the absence of his co-trustee, to preserve property of the trust from destruction. The urgent necessity of the case would constitute an exception to the general rule, and on that account alone the contract would bind the estate. The argument also assumes the contract to be for the advantage of the estate. Now whether this be so it is impossible to say, as that may depend on a variety of considerations. But the conclusive answer to this suggestion is, that it is a matter in the first instance solely for the discretion and judgment of all the trustees. It is a question which one alone cannot decide. To say that the validity of the contract depends on its being afterwards deemed advantageous to the trust would in fact abrogate the rule, and would lead to perplexing inquiries and to questions which in many cases it would be difficult to settle. It is a rule in equity, as is said, that what is compellable by suit is equally valid if done by the trustees without suit. And this is true; but to give force and application to the suggestion it must be shown that a Court of Equity would compel the trustee to enter into this contract. But as no Court of Equity would interfere in such a case, the application of this principle is not very obvious. It is urged that if instead of a promise to pay there had been a payment of the rent by one of the assignees in avoidance of the distress, it would scarcely be questioned he would be entitled to a credit for the amount thus paid. Without expressing any positive opinion on this point, I would barely observe that it seems to me to be stating the same question in a different form, and that it would be more prudent at least to refrain from doing so without the assent of the other trustees. ,It is strongly urged that the creditors have the benefit of the consideration on which the promise of the trustee was based, and that it is ungracious in them now to dispute it. This argument addresses itself rather to the generosity of the creditors than any legal right arising from the contract; but the latter is the question now under consideration. Besides, it assumes a matter admitting of some doubt, and which the trustees must determine for themselves, viz., whether the contract may not have been a detriment rather than a benefit to the fund. Hardship cannot with truth be alleged; for the contracting parties were aware, or at least ought to have been, of the rule which prevents one of two or more trustees from making a contract binding the fund. If any loss arises from a violation of this well-settled rule, it is but right that they alone should abide the consequences. Whether the contracting party is personally liable is not the matter in dispute, but its obligatory force on the fund in the hands of the trustees. We think it better to adhere to the rule which requires the assent of both, and that this case presents a strong illustration of the pro*411priety of this course. It was clearly the duty of the trustees to manage the trust for the best interests of the creditors; and had the property been removed immediately on tfye assignment, the landlord would have had no lien whatever. But instead of pursuing this obvious course, they permit the goods to remain on the premises until the rent becomes due and the right of distress attaches, and then one of them, the son of the landlord, without any consultation with his colleague, undertakes to make the contract in question.
This view of the case makes it unnecessary to consider the objection to the competency of Joseph Phipps.
The decree of the court ordering $500, one year’s rent, to be paid to the estate of Elisha Phipps is reversed.
Decree reversed.