Court Opinion

ID: 5201787
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:53:50.03482+00
Date Added: 2024-06-11T08:27:12.783175
License: Public Domain

Ingraham, J. (concurring) :
I concur in the affirmance of this judgment. ■ It is not necessary to decide whether or riot the beneficiaries of this trust could maintain the, .action without a request of the trustees, who had been guilty of ‘ dealing with the- trust property for tlleir own benefit, to sue, and a refusal by them. , I-do not understand that any of the cases cited is an authority for the'proposition that where a trustee . has been guilty of "the breach of trust charged, a request is necessary for - the cestui que trust to maintain an action either against á trustee to recover for the breach of trust, or against par-, ties to whom hé has transferred the trust property iti violation of-the'trust and with notice of the trust relation:
In this case the plaintiff admits that lie received a benefit from the transactions complained of. He alleges that he received this benefit without full knowledge of the transactions, and that certain beneficiaries having requested him to sue he has complied with their request. He presents the facts to the- court and asks it to "render such judgment for the protection of the beneficiaries as is just; I think he had a right to maintain this -action asking for alternative relief, and the court having all the parties before it can grant .such relief as the situation as presented at the trial requires.
It ’ also seems -to me clear that before a court can grant a jjudg- " ment setting aside the transaction and requiring-the corporation to retransfer the property of ■ the testator to the trustees, the stock issued by the company in payment of the property would have to ^ be returned ; but as the plaintiff has but a small proportion of stock which .he offered to return, the balance of the stock being held by or for the other trustees, it is quite clear that it would be impossible. for the plaintiff to offer to return the stock that is held by his cotrustees. " '•
*697I also think that this transaction was not void but voidable at the election of the beneficiaries. If the property had been transferred to the corporation and the corporation had issued all of its capital stock to the trustees who held the stock as part of the trust estate, it is difficult to see how there would have been any misapplication of the trust, funds. The estate would then have held a mortgage upon the property and all the stock of the corporation, owning the equity of redemption, and thus would have held substantially what was held before, i. e., all the property. The fraud consisted of the trustees taking the stock issued by the company for the purchase of property to themselves individually instead of to themselves as trustees. Undoubtedly those interested in the estate could ratify this transaction, but require the trustees to account for all that they received as a consideration for the transfer of the property, for I assume that if the rights of innocent third parties are not affected they could elect to set aside the whole transaction and have the property thus disposed of retransferred to the trustees to become part of the trust estate. But as the plaintiff, one of the trustees who joined in the transaction complained of, could not elect for the beneficiaries, I think, he had a right to come into court, present the facts making the beneficiaries a party, and ask the court to make such a decree as would be required to protect the trust estate. Neither the defaulting trustees nor the corporation who received the property with notice of ■ the trust can object to the maintenance of the action upon the ground that the beneficiaries have not yet formally elected as to whether they will affirm or dis-affirm the sale to the corporation. The plaintiff individually as a stockholder was a proper party to the action, and whether he should have been made a party plaintiff or party defendant does not seem to be material.
I think, therefore, a good cause of action is alleged, and,for the reasons .here stated I concur in the affirmance of the judgment.
Judgment affirmed, with costs, with leave to answer over on payment of costs.