Court Opinion

ID: 6669993
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:09:06.231033+00
Date Added: 2024-06-11T16:00:28.802606
License: Public Domain

Tuck, J.,
delivered the opinion of this court.
The admissions at the bar, on the part of the appellants’ counsel, have left only one of their points for our consideration, to wit: “Whether the sale and conveyance made by the sheriff to James Philips, invested him with a complete title to the property in controversy?” being that mentioned in the deed of 27th March 1834.
IJpon this admission the appellee is entitled to relief as against the cestui que trusts in the deed, that instrument being fraudulent and void as against the creditors of the grantor. But it is said that Philips occupied a different attitude after his purchases at the sheriff’s sales; that the property having been seized and sold under judicial process, issued at the instance of the creditors of Spindler, who had a right to sell for the satisfaction of their judgment, Philips had as much *421right to buy as any other person. This position is met on the part of the appellee by two objections: — First, it is contended that Philips was party to, or if not party to, must bo affected by the alleged fraud and collusion, concocted for the purpose of bringing this property into market, to be sold to the prejudice of Spindicr’s other creditors; and secondly, that if he is not affected by this fraudulent arrangement, equity will not allow him to become the purchaser of property •which he held in trust for others. Of these in their order.
For most of the time that these transactions were taking place Philips was abroad, and could have had no participation in them. He gave his sanction, on his return, to what his agent had done; but it does not necessarily follow from this that he was aware of any fraud in the acts of the parties. Nor do we find in the record such proof of fraud and collusion in bringing about the sheriff’s sales, as to satisfy us that the judgment, execution and sales were not the act of the insurance company, uninfluenced by any solicitations or contrivances of those charged with the fraud.
There arc circumstances of suspicion which, as against the other parties, might afford evidence of fraud in bringing about the sheriff’s sales; but we cannot find the truth of this allegation as against Philips, when he was not in the country at the time, in opposition to the direct and positive denials in the answers, and in the absence of more positive proof on the subject. The sheriff proves that the property was sold in the usual way, and that the purchase money was paid at the time of the sales. Philips states that the purchases were made in good faith, and that the money paid was his own, of which no part has been refunded. If this were not true, a further examination of the sheriff might have traced the residue, after paying the judgment, to the hands of Philips, or his agent or attorney, and thus shown his participation in the fraud. It is difficult to believe that Philips would have made this purchase under the alleged fraudulent arrangement, and" not have secured to himself, In some manner, the residue of this large sum, if it had been advanced by him merely in aid *422of the fraud. His exhibiting the deed at the sale is relied upon as evidence of a fraudulent intent; but we do not think this by any means conclusive, especially if such conduct can be reconciled with another view of the case, not liable to the imputation of fraud. If he intended to maintain the validity of the deed of trust, it was proper that he should give notice of its existence, that purchasers might not afterwards allege, that he stood by and permitted them to make an improvident bargain. It is immaterial whether he designed to buy for himself, or for the purpose of quieting his title as trustee, (1 Gill, 493;) because no matter what his intention might be, the law will protect cestui que trusts against the acts of the trustee. It is alleged, also, that though making the purchase for, and taking the deeds to, himself, he has dealt with the property as trust estate, by allowing the family of Spindler to occupy and enjoy it, which is evidence that he designed to consummate the original fraud. Mrs. Spindler was his daughter, her husband soon after died, leaving his family in needy circumstances — fit objects of a father’s care and protection. But when he made his will he dealt with it as his own, by charging it, to some extent, with his own debts, and devising it ultimately to his right heirs, instead of those of Spindler, who would be entitled under the deed. From these circumstances we may infer, that he did not buy the property for the purpose of carrying out the fraud. It is conceded that any other person might have purchased and taken a good title. Suppose such had been the case, and that the money had been paid to the sheriff, as in this case, and the balance, after satisfying the judgment, paid over to Spindler the defendant in the judgment, would the creditors have been in any better situation than they were the day on which Philips made the purchase ? Surely not. If fraud was suspected, or if Spindler was insolvent, they might have proceeded against this surplus in the sheriff’s hands; but could not have gone against the property in the hands of a bona fide purchaser. It is immaterial whether there is or is not fraud on the part of others if the purchaser be innocent. In such a case a good title may *423bo acquired, notwithstanding the fraud; for otherwise, no purchaser, at a judicial sale, would be safe — indeed few, if any, such sales would be made.
His honor, the Chancellor, in his opinion, does not consider the question of fraud as connected with the sheriff’s sales. He treats the deeds as good inter partes, which is unquestionably correct, and as having divested Spindler of all interest in the property, except the contingent life estate reserved to him by the deed, and that when Philips purchased at the sheriff’s sale, he acquired, and could acquire, nothing more than this contingent right, which, by the death of Spindler, no longer existed. 1 Md. Ch. Dec., 515. If this view of the extent of the rights of creditors against the properly of a fraudulent grantor be correct, then, even if there be no fraud in the sheriff’s sale, Philips could have no interest in the present controversy. But in this we do not concur. Though such a deed be good as between the parties, it is- void as against creditors, and the law, when dealing with the property in behalf of creditors, treats it as if no deed had been made; as to them it is no deed at all. The purchaser takes all that the grantor owned in the properly at the time of the conveyance. If questions subsequently arise as to the bona fides of the deed, they must be settled between the purchaser and those claiming under it. The purchaser is substituted, by law, in the place of the judgment creditor. 17 Conn., 492. 7 Blackf., 66. 2 Wharton, 240. 4 Wash. C. C. Rep., 129. 1 Watts and Seargt., 297. 11 Gill and Johns., 45. 1 Md. Rep., 470. Assuming, therefore, that the deed of March 1834, is void as against Spindler’s creditors, and that there was no fraud on the part of Philips in connection with the sheriff’s sale, he must be treated as the purchaser of Spindler’s entire interest in the properly at the date of the deed of trust.
.As to the second objection taken on the part of the appellee : The question here is not between Philips and those claiming under the deed as cestui que trusts, but between-Philips and the creditors of the fraudulent grantor. The *424general rule certainly is, that a person who undertakes to act for another, cannot, in the same matter, act for himself. But it is not universally true, that a trustee cannot purchase the trust estate. Circumstances may arise to render it necessary, in order to protect the interests of the cestui que trusts. Whether he will, after such sale, hold the property for himself or for others, is another question. In the case of Bell vs. Webb and Mong, 2 Gill, 170, the Court of Appeals said: “One of the questions in this case is, whether a trustee can be permitted to purchase the cestui que trusts' property levied upon and sold at a sheriff’s sale, without any instrumentality of his ? As decisive of this question, we refer to 7 Gill and Johns., 1. The trustee thus purchasing will be entitled to reimbursement for his expenditures in the purchase, but he cannot deprive the cestui que trusts of the benefit arising from the purchase, if there be such benefit” See, also, Mong vs. Bell, 7 Gill, 244.
Upon these authorities we are of opinion,- that though Philips could purchase, he could not have held the property for his own benefit. He was estopped from denying the validity of the deed of trust, although the creditors of Spindler might assail it; and when vacated at their instance, the interest of the cestui que trusts must enure to the benefit of the creditors. Philips will be allowed for his expenditures and improvements, but cannot be charged with the rents and profits, as in the case of Bell vs. Mong, because the complainant has waived that part of the relief claimed by his bill. Under these circumstances, however,- we think that interest should not be allowed to him. Nor can we notice the personal property mentioned in the proceedings, inasmuch as no appeal was taken in reference thereto. Having expressed our views and pointed out wherein we differ from the chancellor, a decree will be signed accordingly.

Decree reversed.

The decree of the court passed in this case, after reversing the decree of the chancellor with costs, proceeds as follows-: *425siÁnd this court proceeding to pass such decree in the premises, as the court of chancery ought to have passed, it is further adjudged, ordered and decreed, that the property mentioned in the deed of the 27th of March 1834, be sold by the appellee, Joshua J. Atkinson, the permanent trustee of William C. Spindler, according to the provisions of the insolvent laws, applicable to the city and county of Baltimore. And that he apply the proceeds of such sale under the directions of the court of common pleas, in the first instance to the reimbursement of the advances made by James Philips, in the purchase of said property at the sheriff’s sales and of all permanent improvements, and all other necessary expenditures made upon the said property by him or his representatives, with interest from date of this decree; and that he distribute the balance of said proceeds of sale among the creditors of said Spindler, according to. the provisions of the insolvent laws, and Under the’ direction of the court of common pleas.”